Ratio Analysis

Ratio is the relationship between two financial variable. It is expressed as one figure divided by another.

Types of ratio analysis. There are four major Types of Ratio Analysis

  • Liquidity ratio
  • solvency ratio /debt management ratio / leverage ratio
  • Turn over ratio /Activity ratio /Efficiency ratio
  • Profitability ratio

Liquidity Ratio

  1. Current ratio = current assets/current liabilities.
  2. Quick ratio /liquid ratio /Acid test ratio = Quick assets/current liabilities

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