Top 10 Ratio Analysis Templates to Gauge Financial Performance

Top 10 Ratio Analysis Templates to Gauge Financial Performance


An equity multiplier ratio that is too high compared to other companies in the industry may indicate that management is too aggressive in running the business. The debt ratio measures the proportion of debt a company has to its total assets. A high debt ratio indicates that a company is highly leveraged. Companies use liquidity ratios to measure working capital performance – the money available to meet your current, short-term obligations .

  • A positive net working capital indicates that a company has a large number of assets, while a negative one indicates that the company has a large number of liabilities.
  • Days Payable Outstanding shows the time in days a business has to pay back its creditors.
  • Assessing the health of a company in which you want to invest involves measuring its liquidity.
  • There is only one calculation for vertical analysis – calculating the % of each individual account or line-items to the base – but depending on the statement, the base is different.
  • Inventory represents goods, raw materials, parts, components, or feedstock, amongst other things.

Financial instruments that potentially subject the Organization to concentrations of credit risk consist primarily of cash balances and pledges and accounts receivable. To limit credit risk, the Organization places its cash and cash equivalents with high credit quality financial institutions.

Free Cash Flow Margin

Total-debt-to-total-assets is a leverage ratio that shows the total amount of debt a company has relative to its assets. The company’s analysts calculate EPS by dividing net income by the weighted average number of common shares outstanding during the year. Learn accounting fundamentals and how to read financial statements with CFI’s free online accounting classes. Inventory turnover ratio can vary, especially when you look at retail stocks. This is because retailers generally have higher inventory, especially during peak shopping periods. You can calculate the ratio by dividing the total liabilities by the total shareholder equity. Now that we have discussed the main types of ratios, let’s dive into the top 10 most popular financial ratios.



Posted: Fri, 24 Feb 2023 22:38:12 GMT [source]

This calculation sums up a company’s operating performance by showing how its growth and profitability balance against each other. This allows investors, boards, and management teams to quickly understand a company’s overall sustainability. The SaaS Quick Ratio measures the efficiency of a company’s growth by comparing customer bookings and upgrades to customer churn and downgrades. It can help you determine if your current growth is sustainable or if you need to work to reduce customer churn. The debt-to-assets ratio tells how many assets a company has that are financed by debt and is calculated by dividing total liabilities by total assets.

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Ten Ratios For Financial Statement Analysis holders and analysts compare the dividend per share to the company’s share price using the dividend yield ratio. Market value ratios are used to measure how valuable a company is. These ratios are usually used by external stakeholders such as investors or market analysts but can also be used by internal management to monitor value per company share. Higher interest coverage ratiosimply the greater ability of the firm to pay off its interests. This financial ratio signifies the ability of the firm to pay interest on the assumed debt. Operating LeverageOperating Leverage is an accounting metric that helps the analyst in analyzing how a company’s operations are related to the company’s revenues.


Net Tangible Tangible Assets is the value derived from the company’s total assets minus all intangible assets. Net Tangible Assets per share is calculated by dividing the net assets by the outstanding number of equity shares. The higher the ratio, the better the utilization of the capital employed.

Market Prospect Ratio

The fundamental basis of ratio analysis is to compare multiple figures and derive a calculated value. Instead, ratio analysis must often be applied to a comparable to determine whether or a company’s financial health is strong, weak, improving, or deteriorating. The Center also has financial instruments, consisting primarily of cash, which potentially expose the Center to concentrations of credit and market risk. The Center has not experienced any losses on its cash and cash equivalents.

What are the 8 financial ratios?

  • Earnings per share (EPS)
  • Price/earnings ratio (P/E)
  • Return on equity (ROE)
  • Debt-to-capital ratio.
  • Interest coverage ratio (ICR)
  • Enterprise value to EBIT.
  • Operating margin.
  • Quick ratio.

Financial statement ratios are measures of the efficiency and productivity of a business that are calculated using information found on the financial statements. There are five basic ratios that can be used to fulfill this mission. The quick ratio of 0.83 means that for every $1 in liabilities, there’s $0.83 of liquid assets available to cover them. Liquid assets are those assets that can easily be converted to cash. Debt-to-assets is a fourth ratio that’s important to a company.

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