# What are financial performance ratios?

**Financial ratios**are the indicators of the

**financial performance**of companies and there are different types of

**financial ratios**which indicate the company's results, its

**financial**risks and its working

**efficiency**like the liquidity

**ratio**, asset turnover

**ratio**, Operating profitability

**ratios**, Business risk

**ratios**,

Likewise, people ask, what are the four financial performance ratios?

In general, **financial ratios** can be broken down into **four** main categories—1) profitability or return on investment; 2) liquidity; 3) leverage, and **4**) operating or **efficiency**—with several specific **ratio** calculations prescribed within each.

One may also ask, what are financial ratios used for? **Financial ratios** offer entrepreneurs a way to evaluate their company's performance and compare it other similar businesses in their industry. **Ratios** measure the relationship between two or more components of **financial** statements. They are **used** most effectively when results over several periods are compared.

Moreover, what are performance ratios?

Investopedia defines **Performance Ratios** as, 'These **ratios** look at how well a company turns its assets into revenue as well as how efficiently a company converts its sales into cash' **Performance ratios** help in: Gauging how efficiently and effectively a company is using its resources to generate sales.

What are the five financial ratios?

**5 Categories of Financial Ratios**

- Liquidity Ratios.
- Activity Ratios.
- Debt Ratios.
- Profitability Ratios.
- Market Ratios.