Respond to the following in a minimum of 175 words: Describe the 3 main categories of ratios and provide a specific example of a ratio that is used in each category. For each of the 3 ratios you...

Ratio analysis is the important tool for analyzing the financial performance and condition of the entity using the financial statement (Johnson, Rose 2021). There are various categories of the ratio such as:
· Liquidity Ratio
· Profitability ratio
· Solvency ratio
1. Liquidity Ratio: This ratio determines the liquidity condition of the entity. Current ratio is the example for this liquidity ratio. It measures the ability of the entity to pay off its current debt...