Types of Financial Ratios And Their Formulas
Firstly, we must know about the term Ratio, then we discuss about the types of Financial Ratios And Their Formulas. Ratio Ratio is a relationship of one variable to another. Ratios are important to make financial analysis because by comparing results, we can get accounting information of various financial statements throughout the Accounting Period. Such information is expressed in percentage or in other ways to analyze the performance of the Entrepreneur from past to present and from present to future prospective. For Example, we can compare the Current Assets with Current Liabilities to check the working capital of the business. If the current assets are more than current liabilities, then the Entrepreneur is in a position to meet its short-term obligations. On the other hand, the firm is not running well to meet its daily expenses and pay its debts in time. Now, let us know about Financial Ratios or Accounting Ratios Financial Ratios or Accounting Ratio...