abhishreshthaa
Abhijeet S
MODERN CLASSIFICATION
The above basis of classification has been found to be too crude
and unsuitable because analysis of the balance sheet and income statement cannot be done in isolation. They have to be studied together in order to determine the profitability and solvency of the business. In order that ratios serve as a tool for financial analysis, they are now classified as:
1. Profitability Ratio
2. Turnover Ratio
3. Financial Ratio
4. Leverage Ratio
The above basis of classification has been found to be too crude
and unsuitable because analysis of the balance sheet and income statement cannot be done in isolation. They have to be studied together in order to determine the profitability and solvency of the business. In order that ratios serve as a tool for financial analysis, they are now classified as:
1. Profitability Ratio
2. Turnover Ratio
3. Financial Ratio
4. Leverage Ratio