Financial Ratios

Financial Ratios Calculator

We use financial ratios to get a quick view on the current business scenarios instead of huge array of financial statement data which is extremely time-consuming. ACalculator will assist you with important financial ratios to take immediate decisions regarding profitability, liquidity, turnover, solvency and other crucial phenomenon.
Total current assets
Cash plus accounts receivable, inventories, prepaid expenses and other assets those are easily convertible into cash.
Total current liabilities
Accounts payable, wages, taxes payable and other liabilities that are due within a period of one year.
Total long term assets
Total amount of assets that are not converted into cash within one year. These are assets that you hold for long terms to run the business. For example – land, building, equipment etc.
Total long term liabilities
Total amount of deferred taxes, mortgage, notes payable and any other long-term liabilities.
Sales
Total amount of sales completed within this period.
Receivables
Current total balance in the accounts receivable.
Cost of goods sold
Total cost of goods sold (COGS). This includes raw materials, labor cost, cost of supplies and any other cost required to prepare finished goods.
Operating expenses
Total cost required to run the business. This includes mostly the administrative costs.
Interest expense
Total amount of interest expense during this period.
Inventory
Total value of inventory as raw materials, work in process, and finished goods.
Other income
Total amount of income earned in ways other than regular operation. Sale of securities, sale of tangible goods etc. are examples of this type of income.
Gross profits
Gross profits are calculated as revenue minus COGS. So this indicates your profit before you pay operating & fixed expenses, interests, and taxes.
Operating income
This is the EBIT or Earnings Before Interest and Tax.
Net income before taxes
This amount indicates toward the income before tax. This is your net income if there were no taxes.
Gross profit margin
Formula: Gross profit/sales
This ratio shows your gross profit from each unit of sales. This is a major profitability indicator of your business. If the ratio is less than one, you are supposed to incur losses as the products are being sold at a value less than the production cost. In this situation you must increase the price of the goods.
Operating profit margin
Formula: Operating income/Sales
This is another profitability measure of your business. This ratio indicates your profitability before you pay any interests and taxes. This is useful to compare your businesses efficiency to those your competitors.
Net profit margin
Formula: Net income/Sales
This is your profitability based on the net income of your business.
Current ratio
Formula: Current Assets divided by current liabilities
Current ratio is good at describing your ability to meet short term obligations. This indicates whether your current level of working capital is adequate or not to meet your day to day expenses. As per the rule of thumb, it is the best practice to maintain a current ratio of 2.0.
Quick ratio
Formula: Current assets minus inventory divided by liabilities
This ration indicates your ability to meet financial obligations immediately. This is why quick ration is considered as the ‘Acid Test’ for your business and if it is between 0.50 and 1.00, it is considered as adequate.
Inventory turnover ratio
Formula: Cost of goods sold/Inventory
The inventory turnover ratio tells you about the number of times during this period your total inventory is sold and reproduced. Higher turnover ratio indicates a better condition.
Sales to receivables ratio
Formula: Net sales/Net receivables
Also known as receivables turnover ratio, it shows the relation between net sales and unpaid sales. Higher ration indicates higher efficiency of your sales collection process.
Return on assets
Formula: Net income before taxes/Total assets
This ratio will show the efficiency and earning ability of your assets. The higher the ratio, the more profit is earned by your assets. Using this ratio, businesses can understand their condition in comparison to their major competitors.
Debt to worth ratio
Formula: Total liabilities/Net worth
Debt-to-worth ratio is also known as the debt-to-equity ratio for your business. This shows your exposure and dependency on external capital.
Working capital
Formula: Current assets minus current liabilities
Working capital is the difference of current assets and current liabilities of your business. It is good to keep working capital at moderate level as there is no rule of thumb regarding the size of working capital.