Profitability ratios assess the performance of a firm in terms of its profit generating .

GPM is a ratio analysis used to “assess a company's financial health by calculating the amount of money left over from product sales after subtracting the cost of goods sold".(Investopedia definition)

NPM is a ratio analysis used to “illustrate how much of each dollar in revenue collected by a company translates into profit.” (Investopedia definition)

Efficiency ratios assess how well a firm internally utilizes its invested capital

Return on capital employed (ROCE) measures both the efficiency and profitability of a firm’s invested capital. It assesses the returns a firm is making from its capital employed.

1. Capital employed is found by adding long-term liabilities (loan capital) to its share capital and retained profit. (Long-term liabilities + Shareholder's Equity)

2. ROCE is an efficiency ratio found by the following formula:

Liquidity ratios look at the firm's ability to pay its short term liabilities.

Businesses need sufficient levels of liquid assets to help in meeting their day-to-day bills. Liquidity is a measure o how quickly an asset can be converted into cash. 

Have a look at the video to understand more about the important concept of liquidity.