The following points highlight the four main types of accounting ratios. The types are: 1. Return on Investment 2. Profitability Ratios 3. Return on Proprietors' Funds 4. Return on Equity Capital. Accounting Ratios: Type # 1. Return on Investment: Profitability or the Return on Investment is the basic casual ratio. It is ascertained by a comparison of profit earned and [...]
In this article we will discuss about the Predictability of Insolvency on the basis of Ratios. Edward 1. Altman of U.S.A. has developed a model on the basis of which insolvency of a firm can be predicted— this has been developed on the basis of empirical research conducted by him. In Altman's view, the Z' value of the firm under [...]
Performance or activity ratios judge how well the facilities at the disposal of the concern are being used. The ratios are usually calculated on the basis of cost of sales. The ratios are also known as turnover ratios as they express the rapidity with which a unit of capital invested in fixed assets, stock, etc. produces sales. The following are [...]