abhishreshthaa
Abhijeet S
TYPES OF RATIOS
Several ratios are calculated from the accounting data, it can be grouped into various classes according to the financial activity or functions to be valuated.
Short-term creditor’s main interest is in the liquidity position or the short term solvency position of the firm. Long term creditors on the other hand are more interested in the long term solvency and profitability of the firm.
Similarly, owners concentrate on the firm’s profitability and analysis of the firm’s financial position. Management is interested in evaluating in every aspects of firm’s performance.
Ratios can be classified into different categories depending upon the basis of classification. There are two types of classifications. They are:
Traditional classification
Modern classification
Several ratios are calculated from the accounting data, it can be grouped into various classes according to the financial activity or functions to be valuated.
Short-term creditor’s main interest is in the liquidity position or the short term solvency position of the firm. Long term creditors on the other hand are more interested in the long term solvency and profitability of the firm.
Similarly, owners concentrate on the firm’s profitability and analysis of the firm’s financial position. Management is interested in evaluating in every aspects of firm’s performance.
Ratios can be classified into different categories depending upon the basis of classification. There are two types of classifications. They are:
Traditional classification
Modern classification