Financial ratios
Every ratio on the site, grouped by the question it answers. Each page explains the formula and includes a calculator.
Liquidity
Can the business pay the bills due within the next year?
- Current ratioRatio
Current assets ÷ Current liabilities - Quick ratioRatio
(Cash and cash equivalents + Short-term investments + Accounts receivable) ÷ Current liabilities - Cash ratioRatio
Cash and cash equivalents ÷ Current liabilities - Working capital NWCMeasure
Current assets − Current liabilities
Profitability
How much of each sale becomes profit, and how well do assets and equity generate returns?
- Gross profit marginRatio
Gross profit ÷ Revenue - Operating profit marginRatio
Operating income ÷ Revenue - Net profit marginRatio
Net income ÷ Revenue - EBITDA marginRatio
EBITDA ÷ Revenue - Return on assets ROARatio
Net income ÷ Average total assets - Return on equity ROERatio
Net income ÷ Average shareholders' equity - Return on invested capital ROICRatio
Net operating profit after tax ÷ Average invested capital - DuPont analysisRatio
Net profit margin × Asset turnover × Equity multiplier
Leverage
How much does the business rely on debt, and how comfortably does it cover interest and repayments?
- Debt-to-equity ratio D/ERatio
Total liabilities ÷ Shareholders' equity - Debt-to-assets ratioRatio
Total liabilities ÷ Total assets - Interest coverage ratio TIE, ICRRatio
Operating income ÷ Interest expense - Debt service coverage ratio DSCR, DCRRatio
Net operating income (NOI) ÷ Annual debt service
Efficiency
How quickly does the business sell inventory, collect from customers and pay its suppliers?
- Asset turnoverRatio
Revenue ÷ Average total assets - Inventory turnoverRatio
Cost of goods sold ÷ Average inventory - Days sales outstanding DSORatio
Average accounts receivable ÷ Net credit sales × Days in period - Days payable outstanding DPORatio
Average accounts payable ÷ Cost of goods sold × Days in period - Cash conversion cycle CCCRatio
Days inventory outstanding + Days sales outstanding − Days payable outstanding
Valuation
How does the market price a company's shares relative to its earnings, book value and EBITDA?
- Earnings per share EPSMeasure
(Net income − Preferred dividends) ÷ Weighted average common shares - Price-to-earnings ratio P/E, PERRatio
Share price ÷ Earnings per share (EPS) - Price-to-book ratio P/BRatio
Share price ÷ Book value per share - EV/EBITDARatio
Enterprise value ÷ EBITDA