Ratio analysis is the comparison of line items in the financial statements of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of operations, and profitability.

Corporate finance ratios are quantitative measures that are used to assess businesses. These ratios are used by financial analysts, equity research analysts, investors, and asset managers to evaluate the overall financial health of businesses, with the end goal of making better investment decisions. Corporate finance ratios are also heavily used by financial managers and C-suite officers to get a better understanding of how their businesses are performing.

Different types of Ratios:

• Profitability Ratio
  Return on Equity
  Return on Assets
  Return on Capital Employed
  Gross Margin Ratio
  Operating Profit Margin
  Net Profit Margin
• Leverage Ratios
  Debt-to-Equity Ratio
  Equity Ratio
  Debt Ratio
• Efficiency Ratios
  Accounts Receivable Turnover Ratio
  Accounts Receivable Days
  Asset Turnover Ratio
  Inventory Turnover Ratio
  Inventory Turnover Days
• Liquidity Ratios
  Current Ratio
  Quick Ratio
  Cash Ratio
  Defensive Interval Ratio
• Times Interest Earned Ratio
• Times Interest Earned (Cash Basis) Ratio
  CAPEX to Operating Cash Ratio
  Operating Cash Flow Ratio
• Price-to-Earnings (P/E) Ratio