What Are the Four Basic Categories of Financial Ratios

question 31

Multiple Choice

What are the four basic categories of financial ratios?

• A)current, turnover, asset, and earnings ratios
• B)liquidity, leverage, and debt ratios
• C)current, inventory, equity, and debt ratios
• D)liquidity, asset management, leverage, and profitability ratios

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Definitions:

Non-Monetary Assets

Assets that are not in the form of cash or cannot be easily converted to cash, such as property, plant, and equipment.

Proportionately Adjusted Income Statement

An income statement where the figures reflect the proportional share of joint ventures or associates in a company's earnings.

Contractual Agreement

A legally binding agreement between two or more parties outlining the terms and conditions of a business transaction.

Financial Statements

Summarized records of a company's financial activities, including the income statement, balance sheet, cash flow statement, and statement of changes in equity, which provide insights into its financial health.