Financial ratios have been categorized in a variety of manners. You may determine the subsequent broad bases having been utilized in current literature:
Primacy Criterion: This distinguishes a measure that could be considered helpful for all kinds and sizes of business enterprises, from many other measures that are not so universal in usage. The first one has been termed as the Primary Ratio that is: the Return on Investment or the ROI and the other category termed as Secondary measures comprises all other ratios. Such measures will fundamentally vary among firms and they will choose only such of those measures as are relevant for their requirements. The British Institute of Management utilizes this classification for inter-firm comparisons.
Ratios tagged to requirements of interest groups: The main interest groups identified for this reason are:
A) Management
B) Owners
C) Lenders
Such classification assumes that 'management group' is various from 'owner group'.