Accounting ratios

Accounting ratios are crucial for assessing a company's financial health. Here's a summary of key ratios:

1. **Liquidity Ratios**:
- Current Ratio: Current Assets / Current Liabilities
- Quick Ratio: (Current Assets - Inventory) / Current Liabilities

2. **Profitability Ratios**:
- Gross Profit Margin: (Gross Profit / Revenue) * 100
- Net Profit Margin: (Net Profit / Revenue) * 100
- Return on Assets (ROA): (Net Income / Average Total Assets) * 100
- Return on Equity (ROE): (Net Income / Average Shareholders' Equity) * 100

3. **Efficiency Ratios**:
- Inventory Turnover: Cost of Goods Sold / Average Inventory
- Accounts Receivable Turnover: Revenue / Average Accounts Receivable
- Accounts Payable Turnover: Purchases / Average Accounts Payable

4. **Solvency Ratios**:
- Debt-to-Equity Ratio: Total Debt / Shareholders' Equity
- Debt Ratio: Total Debt / Total Assets
- Interest Coverage Ratio: EBIT / Interest Expense

These ratios help investors, creditors, and management evaluate various aspects of a company's financial
performance and position.