Ratio analysis compares the line-item data in a firm's financial statements, which will reveal information regarding liquidity, profitability, operational efficiency, and solvency. Moreover, ratio analysis can be used to look at trends for 1 or more firms within the same industry or sector.

• What are 5 major ratio categories?
• How they could be used to help a firm? Explain your answer.
• What are the most important liquidity ratios? Explain your answer.