Which of the following is NOT a financial ratio category?

• A. Profitability ratios
• B. Solvency ratios
• C. Depreciation ratios
• D. Liquidity ratios

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of financial ratio categories. Financial ratios are used to analyze a company's financial performance and position. Common categories include profitability ratios, solvency ratios, and liquidity ratios.
2. Step 2: Define each category briefly: Profitability ratios measure a company's ability to generate profit relative to revenue, assets, or equity. Solvency ratios assess a company's ability to meet long-term obligations. Liquidity ratios evaluate a company's ability to meet short-term obligations.
3. Step 3: Recognize that 'Depreciation ratios' is not a standard financial ratio category. Depreciation is an accounting method used to allocate the cost of tangible assets over their useful lives, but it is not categorized as a financial ratio.
4. Step 4: Compare the given options to the standard financial ratio categories. Profitability, solvency, and liquidity ratios are widely recognized categories, while depreciation ratios do not fit into these categories.
5. Step 5: Conclude that the correct answer is 'Depreciation ratios,' as it is not a financial ratio category.