Now that you have learned the basic accounting principles underlying the preparation of financial reports, we turn our attention to using the amounts reported within the financial statements to analyze the financial health of a company. Ratios measure the relationship between two or more components of financial statements. They can provide clues to underlying conditions that may not be apparent from individual financial statement amounts. But remember, just calculating a ratio by itself is not very meaningful. They are used most effectively when results over several periods are compared. This allows you to follow your company's performance over time and uncover signs of trouble. The three main categories of financial ratios used to interpret and analyze the information reported in financial reports include liquidity, solvency and profitability ratios. Required: 1. Explain what each type of ratio category measures. 2. Provide an example of a ratio for each category and describe what the specific ratio measures