ratio

  

Definition

Result of one number or quantity divided by another. Ratios are the simplest mathematical (statistical) tools that reveal significant relationships hidden in mass of data, and allow meaningful comparisons. Some ratios are expressed as fractions or decimals, and some as percentages. Major types of business ratios include (1) Efficiency, (2) Liquidity, (3) Profitability, and (4) Solvency ratios.

Use ratio in a sentence

  • A company uses ratios to analyze the financial health of the organization, track progress and calculate profitability among many other reasons. Bankers or investors use ratios to determine if they want to invest in a company.

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