Ashford University Financial Ratio Category Type Discussion

You are going to create an initial discussion post that addresses the following: Ratio analysis is a technique entrepreneurs can use to derive meaning from their financial statements. As a starting point for understanding, consider and analyze the five category types of ratios used to evaluate financial statements (name the ratio type and describe the purpose of the ratio in one to three sentences. For example, what is the purpose of liquidity ratio? Focus on category type, not a specific ratio within the category.

As you develop your response, focus on the following information (you are encouraged to go beyond the course text for information):

• Pay attention to the kind of information the ratio type helps us discover.
• Determine specific limitations associated with the identified ratio types.
• Offer your peers a link to a video or an article that complements your answer to the items above.