Categories of financial ratios


Problem: There are five categories of financial ratios.

  • How much has the company borrowed? leverage ratios
  • How liquid is the company? Liquidity ration
  • How productively is the company using its assets? Efficiency ratios
  • How profitable is the company? Profitability ratios
  • How highly is the firm valued by investors? Market ratios

1) Explain at least 2 ratios in each category

2) Calculate the ratios you selected for a publicly traded company

3) Explain the output of the ratios you calculated

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Accounting Basics: Categories of financial ratios
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