Question

ऑन व्हाट बेसिस कैन retio बbe क्लासिफाइड​

Answer 1

Explanation:

Ratios are classified into three categories:

A) Traditional classification

B) Functional classification

C) User’s angle

A) Traditional classification

Under this classification, the ratios readily suggest through their names, their respective sources, hence are classified as follows:

a) Balance Sheet Rations or Financial Ratios:

They deal with the relationships between two items, or groups of items, which are together found in the balance sheet. Ration of current assets and current liabilities, ratio of stock to working capital etc. are some example

b) Revenue Statement Ratios or Income Statement Ratios

These ratios deal with the relationship between two items, or two groups of items, which are both, found in the income statements.

Example: The ratio of net profit to sales, ratio of expenses to sales etc. These ratios are also known as “Operating Ratios” as they deal with the operating results of an organization.

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