Classification of ratio Ratio may be Classified in a number of ways of keeping in the perticuler purpose to achieve the purpose efficiently

ratio may be classified 1. Liquid ratio 2. Long term solvency ratio 3. Turnover ratio 4. Profitability ratio 1. Liquid ratio Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations. These ratios measure the ability of a company to pay off its short-term liabilities when they fall due. The liquidity ratios are a result of dividing cash and other liquid assets by the short term borrowings and current liabilities. They show the number of times the short term debt obligations are covered by the cash and liquid assets. The measure the liquidity of afirm the following ratio can be calculated 1. Current ratio 2. Liquid ratio 2. Long term solvency ratio One of many ratios used to measure a company's ability to meet long-term obligations. The solvency ratio measures the size of a company's after-tax income, excluding non-cash depreciation expenses, as compared to the firm's total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations.

3. Turnover ratio

A measure of the number of times a company's inventory is replaced during a given time period. Turnover ratio is calculated as cost of goods sold divided by average inventory during the time period. The ratio at which a fund or portfolio trades the securities in it. A higher turnover rate indicates active management; if it becomes very high, this may indicate that the broker or manager is trading securities for the sake of collecting more in fees. It is calculated as the trading volume of the fund or portfolio as a percentage of the entire portfolio. 4. Profitability ratio A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

The banking sector is being an important source of financing for most business. The common assumption which under pins much of the financial performance research &discussion, is that increasing financial performance will lead to improved function and activities to the organization. The subject of financial performance & research into its measurement its well advanced with in finance &management fields. It can be agreed that there are three principle factors to improve financial performance for financial institution, the institution size, its asset management & the operational efficiency.