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There are five categories of ratios used in financial statement analysis. These are: (1) liquidity ratios

There are five categories of ratios used in financial statement analysis. These are: (1) liquidity ratios Dl6wW
There are five categories of ratios used in financial statement analysis. These are: (1) liquidity ratios, which measure a firm’s ability to meet cash needs as they arise; (2) activity ratios, which measure the liquidity of specific assets and the efficiency of managing assets; (3) leverage ratios, which measure the extent of a firm’s financing with debt relative to equity and its ability to cover interest and other fixed charges; (4) profitability ratios, which measure the overall performance of a firm and its efficiency in managing assets, liabilities, and equity (Fraser & Ormiston, 2004); and (5) market value ratios, which bring in the stock price and give an idea of what investors think about the firm and its future prospects (Brigham & Houston, 2009). The liquidity ratios measure the university’s ability to meet its debt obligations using its current assets. When a business is experiencing financial difficulties and is unable to pay its debts, it can convert its assets into cash and use the money to settle any pending debts with more ease. The current ratio is a commonly used measure of short-run solvency, the ability of the firm to meet its debt requirements as they come due. Current liabilities are used as the denominator of the ratio because they are considered to represent the most urgent debts, requiring retirement within one year or one operating cycle. The available cash resources to satisfy these obligations must come primarily from cash or the conversion to cash of other current assets (Fraser & Ormiston, 2004). The quick or acid-test ratio is a more rigorous test of short-run solvency than the current ratio because the numerator eliminates inventory, considered the least liquid current asset and the most likely source of losses (Fraser & Ormiston, 2004). The percentage changes in these two specific ratios from 2018 to 2020 were decreased of –29. 00% and –31. 00% respectively, meaning the university was unable to generate enough cash and struggle with paying debts.
There are five categories of
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ratios
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used
in financial statement analysis. These are: (1) liquidity
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ratios
, which
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measure
a
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firm’s
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ability
to
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meet
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cash
needs as they arise; (2) activity
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ratios
, which
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measure
the liquidity of specific assets and the efficiency of managing assets; (3) leverage
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ratios
, which
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measure
the extent of a
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firm’s
financing with
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debt
relative to equity and its
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ability
to cover interest and other
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fixed
charges; (4) profitability
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ratios
, which
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measure
the
overall
performance of a
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firm
and its efficiency in managing assets, liabilities, and equity (Fraser &
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Ormiston
, 2004); and (5) market value
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ratios
, which bring in the stock price and give an
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idea
of what investors
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think
about the
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firm
and its future prospects (Brigham & Houston, 2009).

The liquidity
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ratios
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measure
the university’s
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ability
to
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meet
its
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debt
obligations using its
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current
assets. When a business is experiencing financial difficulties and is unable to pay its
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debts
, it can convert its assets into
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cash
and
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use
the money to settle any pending
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debts
with more
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ease
. The
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current
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ratio
is a
commonly
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used
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measure
of short-run solvency, the
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ability
of the
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firm
to
This phrase/word (depending on the context) can be potentially replaced with :
meet
its
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debt
requirements as they
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come
due.
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Current
liabilities are
This phrase/word (depending on the context) can be potentially replaced with :
used
as the denominator of the
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ratio
This phrase/word is too simple and can be replaced with:
because
they
are considered
to represent the most urgent
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debts
, requiring retirement within one year or one operating cycle. The available
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cash
resources to satisfy these obligations
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must
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come
primarily
from
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cash
or the conversion to
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cash
of other
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current
assets (Fraser &
Possible spelling mistake found.
Ormiston
, 2004). The quick or acid-
This phrase/word (depending on the context) can be potentially replaced with :
test
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ratio
is a more rigorous
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test
of short-run solvency than the
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current
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ratio
This phrase/word is too simple and can be replaced with:
because
the numerator eliminates inventory, considered the least liquid
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current
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asset
and the most likely source of losses (Fraser &
Possible spelling mistake found.
Ormiston
, 2004).
Three successive sentences begin with the same word. Consider rewording the sentence or use a thesaurus to find a synonym.
The
percentage
This phrase/word (depending on the context) can be potentially replaced with :
changes
in these two specific
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ratios
from 2018 to 2020
were decreased
of –29. 00% and –31. 00%
respectively
, meaning the university was unable to generate
This phrase/word is too simple and can be replaced with:
enough
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cash
and struggle with paying
You use this word too often, consider replacing it with
debts
.
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IELTS essay There are five categories of ratios used in financial statement analysis. These are: (1) liquidity ratios

Essay
  American English
2 paragraphs
327 words
5.5
Overall Band Score
Coherence and Cohesion: 5.5
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Lexical Resource: 5.0
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Grammatical Range: 6.5
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Task Achievement: 5.0
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