Let's use the inventory turnover ratio as an example. During our review of several books and articles we found the inventory turnover ratio in a variety of ratio classifications including liquidity, solvency, activity, asset management, asset utilization, efficiency, and short-term creditor.
Even the current ratio was listed as a liquidity ratio, a solvency ratio, a short-term solvency ratio, and a short-term creditor ratio.
Rather than add to any confusion, we chose to downplay the ratio classifications.
Learn Accounting: Gain unlimited access to our seminar videos, flashcards, visual tutorials, exams, business forms, and more when you upgrade to PRO.
