Ratio Analysis | | PAPER III – ACCOUNTING & FINANCIAL MANAGEMENT FOR BANKERS | MODULE C: FINANCIAL MANAGEMENT
Ratio Analysis - Notes and MCQs Ratio Analysis - Notes and MCQs Meaning of Accounting Ratios Accounting ratios are numerical expressions that represent relationships between various items in the financial statements. They are used to assess the financial health and performance of a business. Classification of Ratios Liquidity Ratios: Measure the firm's ability to meet short-term obligations (e.g., Current Ratio, Quick Ratio). Solvency Ratios: Measure long-term financial stability (e.g., Debt-Equity Ratio). Profitability Ratios: Measure the firm's ability to generate profit (e.g., Net Profit Ratio, Return on Capital Employed). Efficiency Ratios: Indicate how efficiently the business uses its resources (e.g., Inventory Turnover Ratio). Uses of Accounting Ratios Assess operational efficiency Analyze financial performance over time ...