Fine Beautiful Types Of Ratios In Financial Management
They fall into many categories and if variations are included there are hundreds of types of ratios that are common in practice.
Types of ratios in financial management. Financial ratios are the indicators of the financial performance of companies and there are different types of financial ratios which indicate the companys results its financial risks and its working efficiency like the liquidity ratio Asset Turnover Ratio Operating profitability ratios Business risk ratios financial risk ratio Stability ratios etc. However all the ratios are not used by everyone on a regular basis. Common financial leverage ratios are the debt to equity ratio and the debt ratio.
Learn online from the leaders in business education at Harvard Business School Online. Asset Management Ratios 4. Financial ratios can be classified into ratios that measure.
Debt to equity refers to the amount of money and retained earnings invested in the company. Profitability liquidity management efficiency leverage and valuation growth. The last category of ratios is the activity ratios.
They are also known as the efficiency or turnover ratios. Ad Gain confidence in your ability to understand and communicate financial results. These ratios not only depict the situation of total asset classes but also interpret various asset classes individually like Fixed Asset Turnover Ratio Inventory Turnover Ratio Accounts Receivable Turnover Ratio etc.
Debt ratio Total debtTotal assets. Ad Gain confidence in your ability to understand and communicate financial results. Learn how to compute and interpret financial ratios through this lesson.
Net profit NP ratio. The efficiency with which assets are managed used is reflected in the speed and rapidity with which they are converted into sales. Management needs higher profits to pay dividends and reinvest a portion in the business to increase the production capacity and strengthen the overall financial position of the company.