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Leverage Ratios: It focuses on long-term funds used by the businesses business. Its main objective is to measure the long-term solvency of a firm. Capital Structure Ratios: It focuses on Equity funds, debt capital and, preference capital. Its main objective is to find the portion of risky long-term funds. Coverage Ratios: Its main objective is to find whether the firm's earnings are sufficient to cover different charges like interest for debenture holders and dividends for shareholders. Table Of  Content Capital Structure Ratios Coverage Ratio Conclusion A. Capital Structure Ratios 1) Equity Ratio This ratio indicates the proportion of owners' funds to the total funds invested in the business. It is also called the propriety ratio. Shareholder's equity  = share capital ( both equity and preference ) + Reserve and surplus - Accumulated losses OR, Shareholder's equity = Total assets - current liabilities - long-term debt. If the majority of the fund of the business is...

What is Liquidity? In simple words, Liquidity is cash and cash equivalent. Here cash and cash equivalent denote marketable securities like shares which can be easily converted into cash. If somebody says there is a liquidity crisis in the bank it represents a shortage of cash in the bank. similarly, If somebody says there is excess liquidity in the bank it represents excess cash in the bank.  The objectives of Liquidity Ratios are to measures the short-term solvency of a firm. Liquidity ratios focus on current assets and current liabilities. 

Ratio Analysis: How to pick up a share of a company using financial ratios. How to take buy, sell and hold decisions. Know the major objectives of various ratios like Liquidity ratios, performance ratios, and profitability ratios. Ratio analysis enables the users of financial statements to make prompt decisions. Table of Content Meaning and objectives of Ratio Analysis 11 Important Financial Ratio Conclusion Meaning and objectives of Ratio Analysis Ratio analysis refers to the study of the relationship between various variables of a financial statement for the purpose of decision making. Ratio analysis is used by shareholders because it shows the financial position of the company and how the company is utilizing its capital and assets to generate revenue. The major objective of the liquidity ratios is to measure the short-term solvency of the firm. performance ratios measure the efficiency of asset and profitability ratios measures the profit margin and earnings.    11 Importa...