In this article we will discuss about the classification of ratios in accounting. The accounting ratios may be classified on the following bases leading to somewhat overlapping categories: (A) Classification by Statements: The Traditional classification is based on those statements from which information is obtained for calculating the ratios. The ratios are classified as follows: (B) Classification by Users: This [...]
Here is a list of some important financial ratio formulas. 1. Current Ratio = Current Assets/Current Liabilities 2. Net Working Capital Ratio = Net Working Capital/Net Assets 3. Quick Ratio = Quick Assets/Liquid Liabilities 4. Cash Position Ratio = (Cash + Marketable Securities)/ Liquid Liabilities 5. Proprietary Ratio = Shareholders’ Fund/ Total Asset (or) Total Resources 6. Solvency Ratio = [...]
In this article we will discuss about the classification of combined ratios in accounting. They are:- 1. Activity Ratios or Turnover Ratios 2. Profit Cover Ratios. 1. Activity Ratios or Turnover Ratios: This category of ratios includes those ratios, which highlight upon the activity and operational efficiency of the business concern. The funds of creditors and owners are invested in [...]