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The purpose of a financial ratio analysis is for a company to recognize its standing in regards to stability, profits, liquidity, and efficiency. A liquidity ratio is used to analyze if a business can pay back short term obligations by dividing certain assets into certain liabilities depending on each specific ratio. Leverage ratios purpose are for companies to measure their level of debt in a variety of ways. For example, debt to assets, equity, capital, and earnings are amongst the most common ways to measure relative debt. Activity ratios are used to determine how well a company is spending cash in regards to its profits and revenues like, asset, AR, and inventory turnover. Profitability ratios are used to asses a companies standing in relation to its sales revenue compared to other factors like operating costs and profit such as, gross profit margin and operating costs margin. Growth ratios are used to determine the scale at which a company is growing, like a PEG ratio. | believe the most important are the activity ratios because figuring out the efficiency of cash and profit are the best way to support a companies growth