Types of financial ratio

The financial ratio analysis is the most useful tool to determine the range of activities of the business which is run. Observation and analysis of adequate financial ratio analysis results above can help the management to find the weaknesses and advantages the company.


When viewed from the source from which it was made, then the ratio of financial ratios can be classified into 3 groups, namely:

1. Ratio-the ratio of the balance sheet (Balance sheet rations), is the ratio-the ratio of assembled from data derived from the balance sheet, such as the current ratio, acid test ratio, current assets to total assets ratio, current liabilities to total assets ratio and so on.
2. The ratio-the ratio of profit loss report (Income statement ratios), is the ratio-the ratio of assembled from data derived from the income statement, gross profit margin, net operating margin, operating ratio and so on.
3. Ratio-the ratio between reports (Inter-Statement ratios), is the ratio-the ratio of assembled from data derived from the balance sheet and other data derived from the income statement, such as asset turnover, receivables turnover and so on.

A grouping of ratio-financial ratio that is as follows:

• The liquidity Ratio is the ratio-ratio is used to measure the company's liquidity (Current ratio, Acid test ratio).
• Leverage ratio is the ratio-a ratio that is intended to measure up to how much the company's assets are financed with debt (the Debt to total assets ratio, net worth to debt ratio and etc).
• Ratio-the ratio of the activity, i.e. the ratio-a ratio that is intended to measure up to how much a company's effectiveness in working on the sources of funds (Inventory turnover, average collection period , and others).

Ratio-the ratio of Profitability, i.e. the ratio-a ratio that shows the end result of a certain amount of discretion and decisions (profit margin on Sales, Return on total assets, Return on net worth and so on).

Financial ratios can be grouped into three categories, namely:

• The liquidity Ratio, aims to test the adequacy of the funds, the company's solvency, the company's ability to pay immediate obligations to be met.
• The ratio of profitability, aims to measure the efficiency activity of the company and the company's ability to earn a profit.
• The ratio of Owner, associated directly or indirectly with profit and liquidity, helping owners of stock in evaluating the activity and the wisdom of the company that have an effect on the share price in the market.

The ratio can be categorized as follows:

1. The ratio of liquidity, aiming at measuring the company's ability to meet short-term obligations.
2. Leverage ratio, aims to measure the extent to which the needs of corporate finance spent and loan funds.
3. The ratio of activities, aimed at measuring the effectiveness of the company in operating funds.
4. Profitability Ratio, measuring the effectiveness of the management rainy day reflected on the rewards of investment activities proceeds from sales.
5. The ratio of growth, aimed at measuring the company's ability in maintaining its position in the economy and growth in the industry.
6. The ratio of evaluation, aimed at measuring the performance of the overall changes because this ratio is a reflection of the ratio of risk and reward ratio results.

Conclusion

Basically it's ratio or the number of sort of an awful lot of that is in accordance with the needs of the Analyzer, but the ratio figures there can basically be classified into two classes or groups namely: the first , based on financial data source which is an element or elements of the ratio number. Second, based on the purpose of the analysis.