# What each financial ratio means?

**Financial ratios**are relationships determined from a company's

**financial**information and used for comparison purposes. Examples include such often referred to measures as return on investment (ROI), return on assets (ROA), and debt-to-equity, to name just three.

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Furthermore, what are the 5 major categories of ratios?

**The five (5) major categories in the financial ratios list include the following :**

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

Beside above, what are 3 types of ratios? The **three** main **categories of ratios** include profitability, leverage and liquidity **ratios**.

Beside this, what are the different types of financial ratios?

**Financial ratios** are the **ratios** that are used to analyze the **financial** statements of the company to evaluate performance where these **ratios** are applied according to the results required and these **ratios** are divided into five broad categories which are liquidity **ratios**, leverage **financial ratios**, efficiency **ratio**,

What is a good liquidity ratio?

A **good liquidity ratio** is anything greater than 1. It indicates that the company is in **good** financial health and is less likely to face financial hardships. The higher **ratio**, the higher is the safety margin that the business possesses to meet its **current** liabilities.