Ratios calculated from taking various data from the balance sheet are called balance sheet ratio. For example, current ratio, liquid ratio, capital gearing ratio, debt equity ratio, and proprietary ratio, etc.
Ratios calculated on the basis of data appearing in the trading account or the profit and loss account are called revenue statement ratios. For example, operating ratio, net profit ratio, gross profit ratio, stock turnover ratio.
When the data from both balance sheet and revenue statements are used, it is called mixed or composite ratio. For example, working capital turnover ratio, inventory turnover ratio, accounts payable turnover ratio, fixed assets turnover ratio, return of net worth ratio, return on investment ratio.
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Classification of Ratios on the Basis of Financial Statements |
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Balance Sheet Ratios |
Profit and Loss A/c Ratios |
Composite or Mixed Ratios |
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● Current Ratio ● Liquid Ratio ● Absolute Liquid Ratio ● Debt Equity Ratio ● Proprietorship Ratio ● Capita Gearing Ratio ● Assets Proprietorship Ratio ● Capital Inventory to Working Capital Ratio ● Ratio of Current Assets to Fixed Assets |
● Gross Profit Ratio ● Operating Ratio ● Operating Profit Ratio ● Net Profit Ratio ● Cash Profit Ratio ● Expenses Ratio ● Interest Coverage Ratio |
● Stock Turnover Ratio ● Receivable Turnover Ratio ● Payable Turnover Ratio ● Fixed Assets Turnover Ratio ● Total Assets Turnover Ratio ● Working Capital Turnover Ratio ● Capital Turnover Ratio ● Return on Capital Employed ● Return on Equity Ratio ● Return on Shareholders Fund ● Capital Turnover Ratio |