abhishreshthaa
Abhijeet S
TRADITIONAL CLASSIFICATION
This traditional classification has been on the basis of the financial statement to which the determinants of a ratio belong. On this basis the ratios could be classified as:
a) Profit And Loss Account Ratios:
Ratios calculated on the basis of the items of the profit and loss account only.
E.g. gross profit ratio, stock turnover ratio etc…
b) Balance Sheet Ratios:
Ratios calculated on the basis of the figures of the balance sheet only.
E.g. current ratio, debt-equity ratio etc…
c) Composite Ratios or Inter-Statement Ratios:
Ratios based on the figures of profit and loss account as well as the balance sheet.
E.g. fixed turnover ratio, overall profitability ratio.
This traditional classification has been on the basis of the financial statement to which the determinants of a ratio belong. On this basis the ratios could be classified as:
a) Profit And Loss Account Ratios:
Ratios calculated on the basis of the items of the profit and loss account only.
E.g. gross profit ratio, stock turnover ratio etc…
b) Balance Sheet Ratios:
Ratios calculated on the basis of the figures of the balance sheet only.
E.g. current ratio, debt-equity ratio etc…
c) Composite Ratios or Inter-Statement Ratios:
Ratios based on the figures of profit and loss account as well as the balance sheet.
E.g. fixed turnover ratio, overall profitability ratio.