Question

what you know about ratio analysis and its types?and give one axample for each?

Answer 1

Ratio analysis is considered as the calculation of various ratios from a set of financial statements. These ratios are mainly computed such as to compare the same with either earlier years or similar businesses such as to facilitate providing of information for better decision making. The various types of ratios are liquidity ratios, solvency ratios, efficiency ratios, profitability ratios, and investor ratios. The examples for liquidity, solvency, efficiency, profitability, and investor ratios are current ratio, debt equity ratio, inventory turnover, gross profit ratio, and price earnings ratio respectively.