As already mentioned due to the vast universe of ratios, they are divided in broad categories based on what aspects of performance a ratio is intended to detect.
Financial analysts use a variety of categories to classify ratios. The category names and the ratios included in each category can differ. Common ratio categories include activity, liquidity, solvency, and profitability.
These categories are summarized below. Each category measures a different aspect of analysis, but all are useful in evaluating a company’s overall performance and efficiency.
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