First of them is liquidity ratios - A type of ratio by which company can handle its short term debt

obligations and under this there are numerous ratios and example of this is following

particulars- cash equivalent - 2288, short term investment-85,receivables- 1072, stock-7426,other

current assets-352 and total current assets are 11,223

and secondly accounts payable- 4370, outstanding expenses-706,income tax payable-337,deferred

revenue-778,taxes payable-417, other outstanding expenses - 1134 and then total current liability is
equal to 7742

then current ratio will be current assets/current liability so this is 11223/7742= 1.45 and so on other
ratios examples by different formulas.

2. Activity ratios- A type by which we come to know that how efficiently the business is running or how
efficiently the assets is being used by the management to generate maximum revenue and this figure is
calculate by dividing a company's sales by its total assets

3. leverage ratios -by leverage ratio it is determine that how much of the capital that is in company in
the form of debts or how the company is able to meet its obligations and it is calculate by dividing total
debt/ total equity.

Break even analysis is refer to the point when the revenue and total costs are at equal point and this
concept is used to get the information that how much number of units of revenue needed to cover total
costs which can be fixed or variable costs.

And its formula is break even analysis= fixed costs/ (sales per unit-variable cost per unit)

for example in any firm where variable cost is $4 per unit and the sales per unit is $12 whereas the fixed
costs are $100000 so the break even quantity will be

$100000/($12-$2) = $10000

3. Risk involves uncertainty which is about the effects or implications or threatens which stops any
company to generate profits which are targeted by the company.

There are about 2 types of risks which are following

pure risk- A risk which is not in control or which has just two results - complete loss or no loss at all. The
examples of the pure risk are natural disasters, property damage or death.

Speculative risk- A risk in which there is possibility of a gain or possible loss and example of this risk are
the gambling or investing in stock market in which there are two possibilities make money or lose
money or left it out

4. Capital budgeting is used to evaluate big investment projects and deciding whether a project should
be accepted or not and there are numerous types of this which are in two parts and first one is
traditional methods and second is modern methods. payback period ,accounting rate of return ,internal
rate of return and profitability index ,discounted payback period ,net present value,.

1. payback period is used for getting information that how much time it will take to recover the
investment .
2. net present value- present value of inflows less outflows

3. internal rate of return- project's return on investment

4. profitability index method-ratios of present value of inflows to outflows.

5.discounted payback -same as payback but it consider discounted cash flows.

6.accounting rate of return- it is a way to measure profit expected from an investment.