Describe the purpose and meaning for each of the five ratio categories. Who uses the information from each category? What constitutes a complete ratio analysis? Why is a complete analysis used over a few key ratios? Solution solvency ratio: It measures the liquidity of the company by showing whether the company is able to meet its short term and long term obligations.This ratio is used by lender or creditors of the compnay . financial leverage ratio : it is used as the ability to pay total debt of the company comparing with the Equity and the total assets. A company is called to be a highly leverage ,when creditors own a large part of assets . And when they own a small part , then it is called to be a less leverage company. Assets turnover ratio : it is used for knowing how efficiently the avergae total assets are being used to generate the sales revenue . It is calculated as the net sale to Average total assets Profitability ratio : It measures the percentage of net profit(sales - cost of goods sold and taxes ) to the sale revenue .Profitability ratio is used by the investors to know the efficiency of generating profit Market value ratio: This ratio is for measuring the market price of the share to their Book value recorded in Balance sheet.