Functional classification of ratio is based on the purpose for which ratios are computed and it is the most commonly used classification. Under the functional classification, the ratios are classified as follows:
(i) Liquidity ratios
(ii) Long term solvency ratios
(iii) Turnover ratios
(iv) Profitability ratios

(i) Proprietary ratio: Proprietary ratio gives the proportion of shareholders' funds to total assets. Proprietary ratio shows the extent to which the total assets have been financed by the shareholders' funds. It is calculated as follows:
Proprietary ratio = \(\frac { Shareholders's\quad funds }{ Total\quad assets } \).
(ii) Capital gearing ratio: Capital gearing ratio is the proportion of fixed income bearing funds to equity shareholders' funds. Fixed income bearing funds include fixed interest and fixed dividend bearing funds. It is calculated as follows:
Capital gearing ratio = \(\frac { Funds\ bearing\ fixed\ interest\ or\ fixed\ dividend }{ Equity\ shareholders'\ funds } \)

Credit payment period is the average time taken by the business for payment of accounts payables. Lesser the credit payment period, greater is the efficiency of the management in managing accounts payable as it indicates quicker settlement of trade payable. It is calculated as follows.
Credit payment period (in days) = \(\frac { Number\quad of\quad months\quad in\quad a\quad year }{ Trade\quad payable\quad sturn\quad over\quad ratio } \quad \) x 100
Credit payment period (in months) = \(\frac { Number\quad of\quad months\quad in\quad a\quad year }{ Trade\quad payable\quad sturn\quad over\quad ratio } \quad \).

Current ratio = \(\frac { Current\quad assets }{ Current\quad liabilities } \)
= \(\frac { 10,00,000 }{ 4,00,000 } \) = 2.5:1
Yes, it is satisfactory, as it exceeds the ideal ratio of 2:1
Value exhibited by Maxell Ltd. is ability to honour their debts on time.

Let the current liabilities = x;
Current ratio = 3.5:1
Therefore, current assets = 3.5 x
Quick ratio = 2 :1
Therefore, quick or liquid assets = 2x
Liquid assets Current assets - Inventory
2x = 3.5x - 1,50,000
⇒ 2x - 3.5x - 1,50,000  (or)
1.5x = -1,50,000
x = \(\frac { 1,50,000 }{ 1.5 } \) = 1,00,000
Current liabilities = Rs.1,00,000
Current assets = 3.5 x 1,00,000
= Rs.3,50,000
Values that can be associated with the business are
(i) Doing Your Best : Business is doing its beast in keeping its liquidity ratios well above the ideal ratios.
(ii) Safety: Business shows safety towards its short-term creditors by maintaining such short-term solvency ratios.