# Many financial ratios can be utilized to analyze financial statements. These fall into four...

## Question:

Many financial ratios can be utilized to analyze financial statements. These fall into four primary categories. Many financial analysts tend to utilize one or two of the following ratio categories when evaluating a company: Liquidity Ratios, Activity Ratios, Profitability Ratios, Coverage Ratios.

Imagine that you are a financial analyst. Discuss the ratios you would most likely focus on when you conduct your analyses. Provide a rationale for your answer.

## Ratios:

Ratios can be simplistic or complicated calculations of balance sheet and income statement comparisons to fully understand the trends of an enterprise. Ratios can be financial or non-financial.

## Answer and Explanation:

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The two areas I would normally focus on as a financial analyst in a financial institution are liquidity ratios and coverage ratios. Liquidity ratios...

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