Types of Financial Statements and Ratios

Question

Accepted Answer

Financial statements include balance sheet, income statement, and cash flow statement. Ratios include liquidity, profitability, and solvency ratios.

Balance sheet shows a company's assets, liabilities, and equity at a specific point in time
Income statement shows a company's revenue, expenses, and net income over a period of time
Cash flow statement shows a company's cash inflows and outflows over a period of time
Liquidity ratios measure a company's ability to meet short-term obligations
Profitability ratios measure a company's ability to generate profit
Solvency ratios measure a company's ability to meet long-term obligations
Examples of ratios include current ratio, return on equity, and debt-to-equity ratio

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