Ratio Analysis

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11 02, 2016

Ratio – Meaning and Objective

The basic objective of ratio is the analysis of the profitability, liquidity, solvency and efficiency levels in the business to understand the strengths, weaknesses, making inter-firm and intra-firm comparisons for better understanding and decision making.
11 02, 2016

Types of Accounting Ratios

Accounting Ratios can be classified on the basis of the source of accounting elements used or the purpose of calculating such ratios.
11 02, 2016

Liquidity Ratios

Liquidity Ratios are calculated to judge the short term financial position of the company. It helps to know whether company is able to meet its short term liabilities.
11 02, 2016

Solvency Ratios

Solvency ratios are calculated to determine the ability of the business to meet its liabilities in the long run. It helps to judge long term financial position of an enterprise.
11 02, 2016

Activity or Turnover Ratios

The turnover ratios help in checking the capacity of the business to make more sales or turnover. Higher turnover ratio means better utilization of assets and improved efficiency and profitability, so, also known as efficiency ratios.
11 02, 2016

Profitability Ratios

Profitability ratios are calculated to judge the earning capacity of the business. Profitability ratios can be calculated taking various concepts of profit for different purposes.
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