Ratio Analysis Formula, Liquidity, Solvency, Activity, Profitability

Ratio Analysis Formula : Financial Statements serve as a crucial mode to assess a business's market standing, offering insights into both its profitability and overall financial position. These statements are carefully examined using diverse analytical tools, with Ratio Analysis standing out as a primary method for this evaluation. Ratio Analysis helps define the correlation between various financial aspects within a business.

1. Liquidity Ratios
2. Solvency Ratios
3. Activity or Turnover Ratios
4. Profitability or Income Ratios

1.  Ratio Analysis Formula Liquidity Ratios

1. Current Ratio or Working Capital Ratio:

2. Quick Ratio or Acid Test Ratio or Liquid Ratio:

2. Ratio Analysis Formula Solvency Ratios

1. Debt to Equity Ratio:

2. Total Assets to Debt Ratio:

3. Proprietary Ratio:

4. Interest Coverage Ratio:

3. Ratio Analysis Formula Activity Ratios

1. Inventory Turnover Ratio or Stock Turnover Ratio:

2. Debtors or Receivables Turnover Ratio:

3. Creditors or Payables Turnover Ratio:

4. Working Capital Turnover Ratio:

4. Ratio Analysis Formula Profitability Ratios

1. Gross Profit Ratio:

2. Operating Ratio:

3. Operating Profit Ratio:

4. Net Profit Ratio:

1. Return on Investment: