ACCA Strategic Business Reporting (SBR) Practice Exam

Investment ratios are typically considered a subset of financial analysis but do not represent one of the four major categories of key ratios. The primary categories of key ratios generally include profitability, liquidity, solvency, and efficiency.

Profitability ratios assess a company's ability to generate earnings relative to its revenue, operating costs, balance sheet assets, or equity. Liquidity ratios evaluate a company's capacity to meet its short-term obligations, providing insight into financial health and operational efficiency. Solvency ratios focus on a company's long-term sustainability and its ability to meet long-term debts, which is crucial for understanding financial stability.

In contrast, while investment ratios are important for determining a company's attractiveness to investors and assessing the return on investment, they are not classified as a major category of key financial ratios. Instead, they often fall under the broader analysis performed by investors and analysts who examine profitability and growth prospects, making the categorization distinct from the core four.