{"id":37249,"date":"2022-12-26T13:44:38","date_gmt":"2022-12-26T13:44:38","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?p=37249"},"modified":"2025-03-26T16:07:24","modified_gmt":"2025-03-26T10:37:24","slug":"financial-ratios","status":"publish","type":"post","link":"https:\/\/www.5paisa.com\/finschool\/financial-ratios\/","title":{"rendered":"Financial Ratios-Meaning, Types, Uses"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"37249\" class=\"elementor elementor-37249\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-993586f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"993586f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-09a8c58\" data-id=\"09a8c58\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-a7ab6e6 elementor-widget elementor-widget-text-editor\" data-id=\"a7ab6e6\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>A financial ratio is used to calculate a company\u2019s financial status or production against other firms. It is a tool used by investors to analyze and gain information about the finance of a company\u2019s history or the entire business sector.\u00a0<\/p><p>The theory of financial ratios was made popular by Benjamin Graham, who is popularly known as the fundamental analysis father. Financial ratios help interpret the results and compare with previous years and other companies in the same industry.<\/p><p>Ratio analysis is a useful management tool that will improve your understanding of financial results and trends over time, and provide key indicators of organizational performance. Managers will use ratio analysis to pinpoint strengths and weaknesses from which strategies and initiatives can be formed. Funders may use ratio analysis to measure your results against other organizations or make judgments concerning management effectiveness and mission impact. Let us understand the uses and various types of financial ratios.<\/p><h2><span style=\"color: #000080;\"><strong>Uses of the Financial Ratios<\/strong><\/span><\/h2><p><img decoding=\"async\" class=\"wp-image-37237 aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/4-1-4.svg\" alt=\"\" width=\"197\" height=\"197\" \/>Experts use financial ratios for analysis of the financial situation of the company. These ratios allow for comparison between:<\/p><ul><li>Companies<\/li><li>Same company at two different time periods<\/li><li>Industries<\/li><li>Company and its industry average<\/li><\/ul><p>These ratios must be benchmarked against something such as the company\u2019s past performance. Only then, it will be useful. These are not useful for companies that belong to different industries or have different capital requirements.\u00a0 These can be expressed in the value of decimals or in percentages. For all ratios, experts take numerical values from income statements, balance sheets, statements of cash flows and sometimes from statements of changes in equity. Let us now learn about each ratio in detail.<\/p><h2><span style=\"color: #000080;\"><strong>Types of Financial Ratios<\/strong><\/span><\/h2><p>There are many types of ratios and each one signifies a part of a company\u2019s financial health. These are categorized as:<\/p><p><img fetchpriority=\"high\" decoding=\"async\" class=\"size-medium wp-image-37238 aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/2-1-2.svg\" alt=\"\" width=\"300\" height=\"300\" \/><\/p><ul><li>Efficiency ratios<\/li><li>Leverage ratios<\/li><li>Liquidity ratios<\/li><li>Profitability ratios<\/li><\/ul><h3 style=\"padding-left: 40px;\"><span style=\"color: #003366;\">1. Efficiency Ratio<\/span><\/h3><p style=\"padding-left: 40px;\">Efficiency or activity financial ratio measures how well the organization is optimizing its assets. Following are the different types of efficiency ratios:<\/p><ul><li style=\"list-style-type: none;\"><ul><li>Asset turnover ratio<\/li><li>Accounts receivable turnover ratio<\/li><li>Inventory turnover ratio<\/li><li>Days sales in inventory ratio\u00a0<\/li><\/ul><\/li><\/ul><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>a<\/strong>.<strong><span style=\"color: #000080;\">\u00a0<\/span>Asset Turnover Ratio<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">In simple words, it measures the ability to generate sales from assets.\u00a0<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Asset turnover ratio = Net sales \/ Average total assets<\/strong><\/span><\/p><p style=\"padding-left: 40px;\">This ratio measures the value of the revenue generated in comparison with the average total assets for a fiscal year. Average total assets include the initial and final balance of the company\u2019s assets. It indicates how efficiently the company is using its fixed and current assets for revenue generation. These include current, fixed and intangible assets as well as long term investments.\u00a0<\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>b. <\/strong><strong>Accounts Receivable Turnover<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">The accounts receivable turnover is one of the financial ratios for analysis of the number of times a company can turn its receivables into cash over a time period. This ratio is used for measuring the company\u2019s efficiency of collecting on the credit that they provide to their customers.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Receivables turnover ratio = Net credit sales \/ Average accounts receivable<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>c. Inventory Turnover Ratio<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">The inventory ratio indicates the number of times the business sells and replaces the goods during a particular time period. If the inventory turnover ratio is high, it means the goods are selling fast. If this financial ratio is low, then it means that goods are selling slowly indicating that the business is not growing.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Inventory turnover ratio = Cost of goods sold \/ Average inventor<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>d. Days Sales in Inventory (DSI)<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">It is a financial ratio for the analysis of the average number of days that are required by a business for converting its inventory into sales figures. For calculation purposes, the goods considered as \u2018work in progress\u2019 (WIP) are included in inventory. This ratio also determines the average days required by the company for converting its resources into cash flows.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>DIS= (inventory\/cost of goods sold) x number of days<\/strong><\/span><\/p><h3 style=\"padding-left: 40px;\"><span style=\"color: #000080;\">2. Leverage Ratio<\/span><\/h3><p style=\"padding-left: 40px;\">The leverage ratio measures whether the company can meet its financial obligations. It indicates at the amount of capital coming from debt. Once you are aware of this amount, you can evaluate whether a company can pay its due debts.\u00a0 It indicates how the assets and business operations of company assets are financed. There are different types of leverage ratios, including the following five:<\/p><ul><li>Asset-to-Equity= Total Assets \/ Total Equity<\/li><li>Debt-to-Assets= Total Debt \/ Total Assets<\/li><li>Debt-to-Capital= Today Debt \/ (Total Debt + Total Equity)<\/li><li>Debt-to-Equity = Total Debt \/ Total Equity<\/li><li>Debt-to-EBITDA = Total Debt \/ Earnings Before Interest Taxes Depreciation &amp; Amortization (EBITDA)<\/li><\/ul><h3 style=\"padding-left: 40px;\"><span style=\"color: #000080;\">3. Liquidity Ratios<\/span><\/h3><p style=\"padding-left: 40px;\">These are financial ratios that analyses the company\u2019s capability to repay short-term and long-term obligations. Following are the common liquidity ratios:<\/p><ul><li>Acid-test ratio<\/li><li>Cash ratio\u00a0<\/li><li>Current ratio\u00a0<\/li><li>Operating cash flow ratio\u00a0<\/li><\/ul><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\">a.\u00a0<strong>Acid-test ratio<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">An acid test or quick ratio is a financial ratio that measures the ability of a company\u2019s short term assets to cover current financial obligations.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Acid-test ratio= (Cash &amp; Cash Equivalents + Accounts Receivables + Market Securities)\/ current liabilities<\/strong><\/span><\/p><p style=\"padding-left: 280px;\"><span style=\"color: #000080;\"><strong>Or<\/strong><\/span><\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Acid-test ratio= (current assets \u2013 inventories)\/current liabilities<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>b. Cash Ratio<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">Cash or cash asset ratio is a financial ratio for analysis of a company\u2019s capability to pay off short-term debt obligations with either cash or cash equivalents. This is a conservative liquidity ratio that only considers a company\u2019s liquid assets such as cash and cash equivalents.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Cash ratio= cash and cash equivalents\/current liabilities<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\">c.<strong>\u00a0Current ratio<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">Current or Working capital ratio indicates the capability of the business to fulfil its short term obligations due within one year. This is a financial ratio that explains how companies can maximize the liquidity of their current assets to settle payables. It considers the weight of current assets versus current liabilities.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Current ratio = Current assets\/current liabilities<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\">d.\u00a0<strong>Operating Cash flows<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">It measures how efficiently the company can pay off its current liabilities with the cash flow generated from business operations. It indicates how much a company earns from operational activities.\u00a0<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Operating cash flow ratio = Cash flow from operations\/current liabilities<\/strong><\/span><\/p><h3 style=\"padding-left: 40px;\"><span style=\"color: #000080;\">4. Profitability Ratios<\/span><\/h3><p style=\"padding-left: 40px;\">Profitability ratios are the financial ratios for analysis of the company\u2019s ability to generate profit relative to the following:<\/p><ul><li>Revenue<\/li><li>Operating costs<\/li><li>Balance sheet assets<\/li><li>Shareholders\u2019 equity during a specific time period<\/li><\/ul><p style=\"padding-left: 40px;\">If the profitability ratio is high, the business is considered to be performing well as it is generating profits, revenue and cash flow. Following are the different types of profitability ratios:<\/p><ul><li>Gross margin ratio<\/li><li>Return on assets ratio\u00a0<\/li><li>Operating Profit Margin<\/li><\/ul><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>1. Gross Margin Ratio<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">The gross margin ratio is a ratio that compares the company\u2019s gross margin to its margin. It indicates the amount of profit a company makes after paying the cost of goods sold (COGS).\u00a0<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Gross Margin Ratio = (Revenue \u2013 COGS) \/ Revenue\u00a0\u00a0<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>2. Return on Assets Ratio\u00a0<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">It is a metric of investment that measures the profitability of the business by comparing net income to the capital invested in assets. The higher the return, the higher the productive and efficient management in economic resource utilization.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>ROA = Net Income \/ Average Assets<\/strong><\/span><\/p><h4 style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>3. Operating Profit Margin<\/strong><\/span><\/h4><p style=\"padding-left: 40px;\">It is a performance ratio that reflects the profit percentage of the company that is produced from operations before reducing taxes and interest charges. This is also known as the (Earnings Before Interest and Tax) EBIT margin.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Operating profit margin = operating profit\/ total revenue<\/strong><\/span><\/p><p style=\"padding-left: 40px;\">Ratio analysis of financial statements benefits all stakeholders in an organisation. It enables comprehensive financial analysis and effective financial management.<\/p><h2><strong><span style=\"color: #000080;\">Here are some objectives of ratio analysis:<\/span><\/strong><\/h2><p><a href=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/3-1-2.svg\"><img decoding=\"async\" class=\"size-medium wp-image-37239 aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/3-1-2.svg\" alt=\"\" width=\"300\" height=\"300\" \/><\/a><\/p><p style=\"padding-left: 40px;\"><strong><span style=\"color: #000080;\">1. To measure profitability<\/span>:<\/strong> The objective of any business is profitability. Ratio analysis helps to measure values like gross profit ratio, net profit ratio, expense ratio etc., to understand if a business is yielding enough profits or not. A thorough understanding will enable the management to identify problem areas and work on them.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>2. To assess operational efficiency: <\/strong><\/span>Some ratios are used to assess how efficiently a company manages its resources and assets. Efficient use of assets and resources is critical for avoiding meaningless expenses. Mismanagement of assets can be measured using turnover ratios and efficiency ratios.<\/p><p style=\"padding-left: 40px;\"><strong><span style=\"color: #000080;\">3. To ensure easy cash availability:<\/span>\u00a0<\/strong>A company may need cash any time, and it has to ensure that some assets can be liquidated quickly to make up for the requirement. The quick and current ratios of the company determine a firm\u2019s liquidity. Maintaining these ratios at an optimum level ensures the organisation has adequate liquidity.<\/p><p style=\"padding-left: 40px;\"><strong><span style=\"color: #000080;\">4. To determine the financial health of the organisation:<\/span>\u00a0<\/strong>Ratio analysis of a company can also help to determine its long-term solvency. These ratios include debt-equity ratio, leverage ratio. Etc. and help the management to assess the situation and take steps to avoid liquidation. They indicate if there is a strain on the assets or if there is enough leverage in case of a financial crisis.<\/p><p style=\"padding-left: 40px;\"><strong><span style=\"color: #000080;\">5. To compare the performance:<\/span>\u00a0<\/strong>Knowing the fiscal position and financial well-being of the company is important to understand the company\u2019s performance. It also helps to determine the actions management needs to take to improve performance. The ratios are compared to industry standards and previous years\u2019 ratios to assess the progress.<\/p><p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Conclusion<\/strong><\/span><\/p><p style=\"padding-left: 40px;\">These ratios and others will aid your understanding of a business, but they should always be looked at in totality rather than focusing on just one or two ratios. Financial analysis using ratios is just one step in the process of investing in a company\u2019s stock. Be sure to also research management and read what they\u2019re saying about a business. Sometimes the things that can\u2019t be easily measured matter most for the future of a business.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-3f2fbd1 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3f2fbd1\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f025d77\" data-id=\"f025d77\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-d2db475 elementor-widget elementor-widget-heading\" data-id=\"d2db475\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Frequently Asked Questions?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2c2d77c elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2c2d77c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-99e44cc\" data-id=\"99e44cc\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-477d66c elementor-widget elementor-widget-accordion\" data-id=\"477d66c\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7491\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-7491\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">Why Is Ratio Analysis Important?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7491\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-7491\"><p>Ratio analysis becomes important as it portrays a more accurate picture of the actual state of the operations of a company. For example, a company that has made a 1000 crores revenue in the last quarter, might have a negative net profit margin, or might be in a liquidity crunch, due to high debtors. Just static numbers on their own may not fully explain how a company is performing.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7492\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-7492\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">What Are Financial Ratios? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7492\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-7492\"><p>Financial ratios are created to calculate the numerical values which are available in the financial statements. These ratios help in asserting the financial position of a company.\u00a0<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7493\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-7493\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">What Are the different Types of Financial Statements? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7493\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-7493\"><p>The Different Types of Financial Statements are Profit &amp; Loss Statement, Balance sheet &amp; Cash Flow Statement.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7494\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-7494\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">What are the 4 key financial ratios? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7494\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-7494\"><p>The four types of financial ratios are liquidity Ratios, Leverage Ratios, Efficiency Ratio, Profitability Ratio.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>A financial ratio is used to calculate a company\u2019s financial status or production against other firms. It is a tool used by investors to analyze and gain information about the finance of a company\u2019s history or the entire business sector. The theory of financial ratios was made popular by Benjamin Graham, who is popularly known &#8230; <a title=\"Financial Ratios-Meaning, Types, Uses\" class=\"read-more\" href=\"https:\/\/www.5paisa.com\/finschool\/financial-ratios\/\" aria-label=\"Read more about Financial Ratios-Meaning, Types, Uses\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":37244,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,78],"tags":[],"class_list":["post-37249","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs","category-learn-every-aspect-of-markets"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/posts\/37249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/comments?post=37249"}],"version-history":[{"count":10,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/posts\/37249\/revisions"}],"predecessor-version":[{"id":68643,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/posts\/37249\/revisions\/68643"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media\/37244"}],"wp:attachment":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media?parent=37249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/categories?post=37249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/tags?post=37249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}