Financial Ratios Reference
Liquidity Ratios
| Ratio | Formula | Typical Value | Description |
|---|---|---|---|
| Current Ratio | Current Assets / Current Liabilities | 1.5 – 3.0 | Ability to pay short-term obligations |
| Quick Ratio | (Cash + Receivables) / Current Liabilities | 1.0 – 2.0 | Ability to meet obligations without selling inventory |
| Cash Ratio | Cash / Current Liabilities | 0.2 – 1.0 | Most conservative liquidity measure |
Profitability Ratios
| Ratio | Formula | Typical Value | Description |
|---|---|---|---|
| ROE | Net Income / Shareholders' Equity | 15% – 25% | Return on Equity |
| ROA | Net Income / Total Assets | 5% – 15% | Return on Assets |
| Net Margin | Net Income / Revenue | 5% – 20% | Net profit percentage of revenue |
| Gross Margin | (Revenue - COGS) / Revenue | 20% – 60% | Gross profit percentage of revenue |
| EBITDA Margin | EBITDA / Revenue | 10% – 30% | Operating earnings margin |
Leverage Ratios
| Ratio | Formula | Typical Value | Description |
|---|---|---|---|
| D/E Ratio | Total Debt / Shareholders' Equity | 0.5 – 2.0 | Financial leverage level |
| Debt Ratio | Total Liabilities / Total Assets | 30% – 60% | Proportion of assets financed by debt |
| Interest Coverage | EBIT / Interest Expense | > 3.0 | Ability to pay interest from earnings |