Classification Of Accounting Ratios

Accounting ratios can be classified from different point of view. Ratios may be used to evaluate the company's liquidity, efficiency, leverage and profitability. The ratios may be classified as following.

1. Liquidity Ratios
a. Current Ratio
b. Quick Ratio

2. Leverage Ratios
a. Debt-equity ratio
b. Debt to total capital ratio

3. Turnover Ratios
a. Inventory turnover ratio
b. Debtors turnover ratio
c. Average collection period
d. Total assets turnover ratio
e. Fixed assets turnover ratio
f. Capital employed turnover ratio

4. Profitability Ratios
a. Profitability in relation to sales

b. Profitability in relation to investment
c. Profitability in terms of earnings and dividend