Project FRA
Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate earnings relative to its revenue, operating costs, balance sheet assets, and shareholders' equity over time, using data from a specific point in time.
Please Check:https://www.investopedia.com/terms/p/profitabilityratios.asp
For example, the gross profit margin is one of the most often-used profitably or margin ratios
Return Ratios: Return on Assets
Profitability Ratio
This is Financial metric used by various organizations to express the financial health.
Liquidity Ratio Liquidity ratios are an important class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital.
Common Liquidity Ratio methods:
Current Ratio: Current Assets/Current Liabilities
Quick Ratio or Acid Ratio test: (Cash+ marketable securities + Account receivable)/Current Liabilities
Liquidity Ratio
Leverage Ratio: This measures how much capital comes in form of debt or assesses the ability of company to meet its financial obligations.
The leverage ratio category is important because companies rely on a mixture of equity and debt to finance their operations, and knowing the amount of debt held by a company is useful in evaluating whether it can pay its debts off as they come due. Several common leverage ratios are:
1.The Debt-to-Equity (D/E) Ratio
2. The Equity Multiplier Total Assets/Total Equity
3. The Debt-to-Capitalization Ratio- (Short Term debt + Long term Debt)/(Short Term debt + Long term Debt + Shareholders Equity).
Leverage Ratio
The Common Size Ratio refers to any number on a business’ financial statements that is expressed as a percentage of a base.
https://quickbooks.intuit.com/ca/resources/budgeting/small-business-common-size-ratio/
Common Size Ratio