Ratio Analysis Calculator

Companies generate financial statements to demonstrate their financial activity to stakeholders. These are prepared regularly and typically include a balance sheet and an income statement. The balance sheet depicts the current worth of a company's accounts. The income statement depicts the financial consequences of actions over a certain period.

Ratio Analysis

Liquidity Ratios

Current Ratio:

The Current Ratio measures a company's ability to meet its short-term obligations. A value less than one indicates that the company does not have enough incoming cash flow to pay its obligations during the next year.

Quick Ratio:

The Quick Ratio measures a company's short-term liquidity. The quick ratio assesses a company's capacity to meet its most liquid assets' short-term obligations. The higher the fast ratio, the better the company's situation.

Profitability Ratios

Return on Assets (Profitability Ratio):

Return on Assets measures how lucrative a company is about its total assets. ROA indicates how effective management is at generating earnings from its assets.

Return on Equity

The amount of net income returned as a percentage of shareholders' equity is expressed as Return on Equity. Return on equity evaluates a company's profitability by demonstrating how much profit it earns with the money invested by shareholders.

Return on Capital Invested

The Return on Invested Capital metric indicates how well a corporation uses its money to generate returns. When a company's return on capital (ROIC) is compared to its cost of capital (WACC), it becomes clear whether invested capital was utilized successfully.

Common Equity Return

Return on Common Equity assesses a company's performance by displaying how much profit it earns with the money invested by shareholders.

Gross Profit Margin

Gross Profit Margin (Gross Margin) is used to evaluate a company's financial health by displaying the percentage of money left over after deducting the cost of items sold from revenues.

Profit Margin

Profit Margin is used to calculate the profitability of each dollar of sales made by a company.

Operating Margin

The operating margin denotes the profitability of the company's continuous operations before financing charges and taxes.

Earnings Per Share (EPS)

Earnings Per Share (EPS) is the percentage of a company's earnings that is given to each outstanding share of common stock.

Activity Analysis

Asset Turnover

The higher a company's asset turnover, the more efficient it is at exploiting its assets to create sales income.

Accounts Receivable Turnover

Accounts Receivable Turnover is used to assess a company's ability to offer credit and collect debts. The receivables turnover ratio is an activity ratio that measures how well a company utilizes its assets.

Receivables Days

The average number of days receivables outstanding is indicated by Days Receivables. High numbers suggest extensive collection periods, whereas low numbers indicate efficient receivables collection.

Average Days Sales

Average Days Sales is the average daily sale over the course of the year. This is used for estimating and determining daily sales over an equally distributed sales estimate.

Inventory Turnover

Inventory turnover is the number of times a company's inventory is sold and replaced in a given year.

Inventory Turnover Period in Days

Inventory Turnover Period in Days is the number of days it takes for a company to turn over all of its inventory.

Fixed Asset Turnover

Invested Capital Turnover quantifies the ability of fixed assets to create profit. The greater the quantity, the better management's use of fixed assets.

Working Capital Turnover

Working Capital Turnover calculates the ratio of working capital depletion to sales creation over a certain period. This gives some insight into how successfully a company uses its working capital to produce revenue.

Capital Structure Analysis

Debt Ratio

The Debt Ratio shows how much debt a company has in comparison to its assets. The indicator indicates the company's leverage as well as the possible dangers associated with its debt load.

Debt to Equity Ratio

The Debt to Equity Ratio measures the financial leverage of a corporation. It reflects the proportion of stock and debt used to finance the company's assets.

Debt to Net Tangible Worth

The Debt to Tangible Net Worth Ratio compares the financial leverage of a firm to the tangible asset worth of the owner's equity. It reflects the proportion of stock and debt used to finance the company's tangible assets.

Times Interest Earned

Interest in the Times Earned is a financial indicator that measures a company's capacity to meet its debt obligations. Failure to meet these duties may result in a company's insolvency.

Debt Servicing Ratio

The Debt Servicing Ratio measures a company's ability to meet all of its debt repayment commitments, including both interest and principal repayments.

Market Analysis

Price to Earnings Ratio

The Price to Earnings Ratio The ratio indicates how long it will take for earnings to repay the present market share price. This is a valuable metric for comparing businesses in the same industry.

Dividend Yield

The Dividend Yield measures how much a firm pays out in dividends each year on the price of its stock. In the absence of capital gains, the dividend yield is a stock's return on investment.

Dividend Payout Ratio

The Dividend Payout Ratio is the proportion of earnings distributed to shareholders. Earnings that are not distributed to shareholders are anticipated to be kept by the company and reinvested in future operations.

Price to Book Ratio

The Price Book Ratio indicates the market's assessment of a firm in comparison to its accounting valuation. This ratio provides a rudimentary grasp of a company's residual value if it goes bankrupt.

Earnings Per Share (EPS)

Earnings Per Share (EPS) is the percentage of a company's earnings that is given to each outstanding share of common stock.

Du Pont Analysis

The Du Pont Analysis is used to determine the components of corporate operations that contribute to a return on investment for shareholders. Total return on equity is calculated by multiplying profitability by the rate of asset turnover by the asset-to-equity ratio (leverage). Strength and weakness, as well as insight into coma competitive advantage, can be analyzed by identifying and assessing each component. Understanding how each variable contributes to return on equity can allow a researcher to go deeper into a company's operations.

Profit Margin (Du Pont)

Profit Margin (Du Pont) is used to calculate the profitability of each dollar of sales made by a company.

Asset Turnover (Du Pont)

Asset Turnover (Du Pont) is a measure of a company's efficiency in using its assets to create sales revenue; the greater the number, the better.

Leverage of Assets

Leverage of Assets is the ratio of a company's assets to its owner's equity. The greater the number, the greater the leverage.

Analysis of Leverage

Leverage analysis is used to determine how successfully management uses borrowed capital to generate income. Typically, debt is used to raise capital to increase the return to shareholders. This is accomplished by funding the company's assets with debt, which requires a fixed interest payment. If the debt-financed assets create enough pretax net income to repay the interest, any excess net income is profit for the shareholders.

• The Gross Asset Efficiency tells us how much income each dollar of assets creates before taxes and interest are deducted. This reveals how effectively management uses its resources.
• Pretax income is comprised of two components: income from assets funded by shareholder stock and income from assets funded by borrowed debt.
• The income generated by assets funded by shareholders' equity and operations is referred to as income from unleveraged assets.
• Income from Leveraged Assets is the income created by assets that are financed with borrowed funds.
• Assets that have been leveraged The percentage of pretax revenue supplied by management's use of debt to fund assets is the contribution to NI. Higher figures indicate that debt is being used effectively. Negative numbers represent losses caused by debt-financed assets.

Rate of Sustainable Growth

The Sustainable Growth Rate is a company's maximum growth rate if none of its ratios change and it does not raise fresh capital by selling shares.