The current ratio or working capital ratio is a liquidity ratio that measures a firm’s ability to pay its short term liabilities. Short term liabilities are debts or any obligation that is due within one year.

The quick ratio is a liquidity ratio that measures a firm’s ability to pay its short term liabilities with its most liquid assets.

The period of time a firm takes to pay back their suppliers or creditors for their material purchases is known as payable deferral.

The amount of time it takes a firm to convert its inventory into cash is known as the cash conversion cycle. In other words, it is the time taken for firms to convert their resources into cash.

The gross profit margin compares the difference between the revenue and cost of goods sold, against revenue. It is represented in the form of a percentage and is used to evaluate the company’s financial health.

EBIT margin stands for Earning Before Interest and Tax margin. This margin helps stakeholders understand the cost of running the firms as well as profitability.

EBIT return on asset measures the firm’s earnings before interest and tax with respect to the firm’s total asset. The main focus on this ratio is the income and the total asset.

Return on invested capital is a method of calculation in which you measure the performance of a company in terms of profitability.

ROE is another method to measure the profitability of a company. The ROE divides the net income of a company with the shareholder’s equity.