Question

Which of the following represent a major group that ratios are grouped into that make them...

Which of the following represent a major group that ratios are grouped into that make them easier to interrupt?

a. Asset Management

b. All of the above.

c. Debt Management

d. Profitability

e. Liquidity

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Answer #1

Profitability and Liquidity are the 2 major group of ratios. The major profitability ratios are as follows

1. Gross Margin - (Revenue - COGS)/ Revenue

2. EBITDA Margin - (Revenue - Opex)/ Revenue

3. PAT Margin - PAT / Revenue

The major liquidity ratios are current ratio, quick ratio

Current RAtio = Current Assets / Current Liabilities

Quick Ratio = Current Assets except Inventory / Current Liabilities

The other 2 options - Debt management and Asset Management are practices and the category of ratios

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