Financial Ratios, Definition and Types | Moonflow

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The term financial ratio is often used as a synonym for debt collection indicators , but are they the same? And if not, what types of financial ratios exist? In this post from Moonflow, debt collection software , we will tell you all about it.


What will you find in this text?

What are financial ratios?
Types of financial ratios you should consider
1. Financial liquidity ratios
2. Management financial ratios
3. Financial debt ratios
4. Financial profitability ratios
What are financial ratios?
It is not wrong to say that a company's financial buy sms list are indicators, since they are a variety of the latter. However, not all indicators are financial ratios. To qualify as such, they must be quantitative and comparable in nature (and this includes collection ratios ) .

Basically, ratios are indicators that compare two variables in different periods. This allows trends to be identified. To make their degree of effectiveness even greater, it is ideal to cover more than two periods in the comparison.

Types of financial ratios you should consider
The definition of an organization's financial ratios will depend on its interests; however, we can classify them into four types to better understand them:

1. Financial liquidity ratios
The purpose of this segment's set of financial ratios is to measure a company's ability to meet its financial obligations using its most liquid assets, such as cash, accounts receivable and inventories that can be quickly converted into cash.