Identify the major categories of ratios that can be used for analysis purposes.
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Identify the major categories of ratios that can be used for analysis purposes.
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Ratios are powerful tools used for financial analysis helping to assess various aspects of a companys performance financial health and efficiency They can be broadly categorized into the following major categories Liquidity Ratios These ratios measure a companys ability to meet its shortterm obligations and financial flexibility Common liquidity ratios include the current ratio and the quick ratio Profitability Ratios Profitability ratios assess a companys ability to generate profits relative to its revenue assets or equity Examples include the gross profit margin net profit margin return on assets ROA and return on equity ROE Efficiency Ratios Activity Ratios Efficiency ratios evaluate how well a company ...View the full answer
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Related Book For
Accounting An Introduction
ISBN: 9780273733201
5th Edition
Authors: Eddie McLaney, Dr Peter Atrill, Eddie J. Mclan
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