Name any two types of ratios that are used in the business
Question
Name any two types of ratios that are used in the business
Solution
Sure, here are two types of ratios that are commonly used in business:
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Liquidity Ratios: These ratios measure a company's ability to pay off its short-term debts as they come due. Examples include the current ratio (current assets divided by current liabilities) and the quick ratio (cash, marketable securities, and receivables divided by current liabilities).
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Profitability Ratios: These ratios measure a company's ability to generate profits relative to its sales, assets, or equity. Examples include the profit margin (net income divided by sales), return on assets (net income divided by total assets), and return on equity (net income divided by shareholder's equity).
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