What Are the Three Major Classifications of Ratios That Are

question 17

Essay

What are the three major classifications of ratios that are used to analyze financial statements? What is measured by each of these types of ratios?

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a competitive marketplace.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service versus the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service, often intended to protect consumers from excessive prices.