What Are Accounting Formulas? Accounting is generally considered
to be the process of keeping track of a businesses' finances by
keeping track of its accounts payable, accounts receivable and
other financial transactions – often with accounting software.
However, those looking to better understand the nuances of
accounting need to understand the concept of accounting
formulas. Accountants use equations and formulas to calculate
the financial condition of a business. Among those formulas are
accounting ratios, which, according to Accounting Scholars, are
among the most popular and widely used tools of financial
analysis and can help uncover conditions and trends that are
difficult to find by inspecting individual components that make
up the ratio. Ratios are mathematical relationships between two
quantities expressed as a percentage, rate or proportion.
Accounting ratios are divided into five main categories,
including liquidity ratios, profitability ratios, leverage
ratios, turnover ratios and market value ra