An ACCOUNTING RATIO is a number that shows the relationship
between two elements on a firm’s financial statements. Like the
individual elements on the financial statements, these ratios can
be compared with those of competitors, with industry averages, and
with the firm’s ratios from previous accounting periods. Since
there are many accounts shown on the business’s financial
statements, there can be many ratios. The four most popular types
of ACCOUNTING RATIOS are LIQUIDITY RATIOS, PROFITABILITY RATIOS,
ACTIVITY RATIOS and LEVERAGE...