Ratio Analysis Calculator
Free online ratio analysis calculator for financial ratios. Calculate liquidity ratios, profitability ratios, efficiency ratios, and leverage ratios. Perfect for financial analysis, business evaluation, and investment decisions.
Current Ratio Calculator
Quick Ratio Calculator
Return on Equity (ROE) Calculator
Return on Assets (ROA) Calculator
Profit Margin Calculator
Asset Turnover Ratio Calculator
Inventory Turnover Ratio Calculator
Debt-to-Equity Ratio Calculator
Debt Ratio Calculator
Financial Ratios Benchmarks
| Ratio Type | Excellent | Good | Fair | Poor |
|---|---|---|---|---|
| Current Ratio | ≥ 2.0 | 1.5 - 2.0 | 1.0 - 1.5 | < 1.0 |
| Quick Ratio | ≥ 1.5 | 1.0 - 1.5 | 0.7 - 1.0 | < 0.7 |
| ROE (%) | ≥ 20% | 15% - 20% | 10% - 15% | < 10% |
| ROA (%) | ≥ 15% | 10% - 15% | 5% - 10% | < 5% |
| Profit Margin (%) | ≥ 20% | 10% - 20% | 5% - 10% | < 5% |
| Debt-to-Equity | ≤ 0.3 | 0.3 - 0.6 | 0.6 - 1.0 | > 1.0 |
About Financial Ratio Analysis
Financial ratio analysis is a quantitative method for evaluating a company's financial performance and position. It involves calculating and interpreting various ratios derived from financial statements to assess liquidity, profitability, efficiency, and leverage.
Types of Financial Ratios
- Liquidity Ratios: Measure ability to meet short-term obligations (Current Ratio, Quick Ratio)
- Profitability Ratios: Assess company's ability to generate profits (ROE, ROA, Profit Margin)
- Efficiency Ratios: Evaluate how effectively assets are used (Asset Turnover, Inventory Turnover)
- Leverage Ratios: Analyze debt levels and financial risk (Debt-to-Equity, Debt Ratio)
Key Financial Ratio Formulas
- Current Ratio: Current Assets ÷ Current Liabilities
- Quick Ratio: (Current Assets - Inventory) ÷ Current Liabilities
- ROE: Net Income ÷ Shareholders' Equity × 100
- ROA: Net Income ÷ Total Assets × 100
- Debt-to-Equity: Total Debt ÷ Total Equity
Important Notes
- Ratios should be compared to industry benchmarks and historical performance
- Single ratios don't provide complete picture - use multiple ratios for analysis
- Consider economic conditions and company-specific factors
- Ratios are tools for analysis, not definitive measures of success
Frequently Asked Questions
What is ratio analysis?
Ratio analysis is a quantitative method for evaluating a company's financial performance by comparing different financial statement items. It helps assess liquidity, profitability, efficiency, and leverage.
What are the main types of financial ratios?
The main types of financial ratios are: Liquidity ratios (current ratio, quick ratio), Profitability ratios (ROE, ROA, profit margin), Efficiency ratios (asset turnover, inventory turnover), and Leverage ratios (debt-to-equity, debt ratio).
How do you calculate the current ratio?
Current ratio is calculated by dividing current assets by current liabilities (Current Ratio = Current Assets / Current Liabilities). A ratio above 1.0 indicates good short-term liquidity.
What is a good ROE percentage?
A good ROE varies by industry, but generally 15-20% is considered good, and above 20% is excellent. However, very high ROE might indicate high financial leverage or risk.