Define each of the following terms:a. Liquidity ratios: current ratio; quick, or acid test, ratiob. Asset management ratios: inventory turnover ratio; days sales outstanding(DSO); fixed assets turnover ratio; total assets turnover ratioc. Financial leverage ratios: debt ratio; times-interest-earned (TIE) ratio; coverageratiod. Profitability ratios: profit margin on sales; basic earning power (BEP) ratio; returnon total assets (ROA); return on common equity (ROE)e. Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per sharef. Trend analysis; comparative ratio analysis; benchmarkingg. Du Pont equation; window dressing; seasonal effects on ratios

a. Liquidity Ratios:

• Current Ratio: This is a measure of a company's ability to pay off its short-term liabilities with its short-term assets. It's calculated as Current Assets / Current Liabilities.
• Quick, or Acid Test, Ratio: This is a stricter measure of liquidity that excludes inventory from current assets. It's calculated as (Current Assets - Inventory) / Current Liabilities.

b. Asset Management Ratios:

• Inventory Turnover Ratio: This measures how quickly a company sells its inventory. It's calculated as Cost of Goods Sold / Average Inventory.
• Days Sales Outstanding (DSO): This measures the average number of days it takes a company to collect payment after a sale has been made. It's calculated as Accounts Receivable / Total Credit Sales * Number of Days.
• Fixed Assets Turnover Ratio: This measures how efficiently a company uses its fixed assets to generate sales. It's calculated as Net Sales / Net Fixed Assets.
• Total Assets Turnover Ratio: This measures how efficiently a company uses all of its assets to generate sales. It's calculated as Net Sales / Total Assets.

c. Financial Leverage Ratios:

• Debt Ratio: This measures the proportion of a company's assets that are financed by debt. It's calculated as Total Debt / Total Assets.
• Times-Interest-Earned (TIE) Ratio: This measures a company's ability to meet its debt obligations. It's calculated as Earnings Before Interest and Taxes / Interest Expense.
• Coverage Ratio: This measures a company's ability to meet its financial obligations. The higher the ratio, the better the company's financial health.

d. Profitability Ratios:

• Profit Margin on Sales: This measures how much profit a company makes for each dollar of sales. It's calculated as Net Income / Net Sales.
• Basic Earning Power (BEP) Ratio: This measures a company's raw earning power by ignoring interest and taxes. It's calculated as EBIT / Total Assets.
• Return on Total Assets (ROA): This measures how profitable a company is relative to its total assets. It's calculated as Net Income / Total Assets.
• Return on Common Equity (ROE): This measures how profitable a company is with the money shareholders have invested. It's calculated as Net Income / Shareholder's Equity.

e. Market Value Ratios:

• Price/Earnings (P/E) Ratio: This measures the price investors are willing to pay for each dollar of earnings. It's calculated as Market Price per Share / Earnings per Share.
• Price/Cash Flow Ratio: This measures the market's expectations of a firm's future financial health. It's calculated as Market Price per Share / Cash Flow per Share.
• Market/Book (M/B) Ratio: This compares a company's market value to its book value. It's calculated as Market Price per Share / Book Value per Share.
• Book Value per Share: This measures the value of a company if it were to be liquidated today. It's calculated as (Total Assets - Total Liabilities) / Number of Outstanding Shares.

f. Trend Analysis: This involves comparing a company's current performance with its past performance. Comparative Ratio Analysis: This involves comparing a company's performance with that of other companies in the same industry. Benchmarking: This involves comparing a company's performance with an industry standard or best practice.

g. Du Pont Equation: This is a formula that shows a company's return on equity (ROE) can be represented as a product of profit margin, total asset turnover, and equity multiplier. Window Dressing: This is a strategy used by companies to improve the appearance of their financial statements. Seasonal Effects on Ratios: This refers to how a company's financial performance can be affected by seasonal trends in its industry.