Can you respond to this post in 100 words The purpose of investment in the stock market is to earn more returns on investment than earnings in the form of interest on fixed deposits or any other low-risk investment. However, while investing one has to take informed risk, i.e., taking the risk by knowing the pros and cons of the risk. To ensure these various types of ratios can be used. To know the liquidity position of the company one can use the current ratio. The formula for current ratio =Current assets/Current liabilities (Block et al., 2022). Current assets are those assets that are convertible within less than one year. Current liabilities are those which are to be paid within less than one year. The preferred ratio lies generally between 1.5 to 3 times. However, this varies from industry to industry. So, to analyze whether the current ratio of the company in which investment is to be made is ideal or not, one has to compare it with the industry standards in which the company is in. The interest coverage ratio indicates whether the company's earnings before interest and taxes are enough to cover the interest expense of that company. EBIT/Interest expense is the formula for the calculation of this ratio. The number of times interest is covered by Earnings before interest gives an idea about the viability and profitability of the company (Block et al., 2022). If the company in which investment is proposed to be made earnings before interest and taxes are more when compared to interest expense, then there is a high probability that earnings per share of such company would be more. Debt equity ratio indicates the proportion of debt as compared to the own funds of common stockholders. The more the company depends on debt funds, the riskier the investment. The formula for debt-equity ratio =Total liabilities/Total shareholders' equity (Block et al., 2022). So, unless the risk is compensated by way of returns from the investment, investment into companies with high Debt equity ratios should not be made. The P/E ratio gives an idea about the market value of the investment when compared to the earnings of the company. The formula for the calculation of this ratio =Market price per share/Earnings per share (Block et al., 2022). This ratio gives an idea about the fair market value of the stock. In case the P/E ratio is low, it indicates that the current performance of the company is poor