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Describe the classifications of financial ratios.

Describe the classifications of financial ratios.

Answers

Simon
• Turnover/asset management ratio. These ratios indicates the efficiency with which the firm is utilizing the resources at its disposal to generate sales revenue.
Inventory turnover=cost of sales/average stock
• Gearing/ capital structure ratios. These ratios indicates the extent to which an organization has used externally borrowed fixed return/charge capital to finance the assets of the firm and subsequently increase the profitability of the firm.
• Liquidity ratios. These ratio shows the ability of an organization to meet its short term financial obligations and when they fall due for payment.
• Stock market valuation ratios. These ratios indicates the value of the firm and the growth of this value in future
• Profitability ratios. These ratios indicate the ability of a firm to generate returns from investment and from sales.
skilled writter answered the question on May 3, 2018 at 17:09

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