Financial Metrics Ratios List

Current Ratio

Measures ability to pay short-term debts

Current Assets ÷ Current Liabilities

Liquidity (Short-term Health)

Balance Sheet

Quick Ratio (Acid Test)

A more stringent test that excludes inventory (which may be hard to sell quickly)

(Current Assets - Inventory) ÷ Current Liabilities

Liquidity (Short-term Health)

Balance Sheet

Cash Ratio

The most conservative measure, looking only at cash and equivalents

Cash and Equivalents ÷ Current Liabilities

Liquidity (Short-term Health)

Balance Sheet

Gross Profit Margin

Efficiency of production/service delivery

(Revenue - Cost of Goods Sold) ÷ Revenue

Profitability (Earnings Power)

Income Statement

Net Profit Margin

The "bottom line" efficiency after all expenses and taxes

Net Income ÷ Revenue

Profitability (Earnings Power)

Income Statement

Return on Assets (ROA)

How efficiently management uses assets to generate earnings

Net Income ÷ Total Assets

Profitability (Earnings Power)

Income Statement

Return on Equity (ROE)

Profit generated for every dollar of shareholder investment

Net Income ÷ Shareholder's Equity

Profitability (Earnings Power)

Income Statement, Balance Sheet

Inventory Turnover

How many times a company has sold and replaced its inventory during a period

Cost of Goods Sold ÷ Average Inventory

Efficiency / Activity (Operational Flow)

Income Statement, Balance Sheet

Accounts Receivable (AR) Turnover

How quickly the company collects payments from customers

Net Credit Sales ÷ Average Accounts Receivable

Efficiency / Activity (Operational Flow)

Income Statement, Balance Sheet

Days Sales Outstanding (DSO)

The average number of days it takes to collect payment

(Average AR ÷ Total Credit Sales) x Number of Days

Efficiency / Activity (Operational Flow)

Income Statement, Balance Sheet

Debt to Equity Ratio

The proportion of equity and debt used to finance the company's assets

Total Debt ÷ Shareholder's Equity

Leverage & Solvency (Long-term Stability)

Balance Sheet

Interest Coverage Ratio

How easily a company can pay interest on its outstanding debt

EBIT ÷ Interest Expense

Leverage & Solvency (Long-term Stability)

Income Statement, Balance Sheet

Debt-to-Assets Ratio

The percentage of assets financed by creditors

Total Debt ÷ Total Assets

Leverage & Solvency (Long-term Stability)

Income Statement, Balance Sheet

Price-to-Earnings (P/E) Ratio

The amount an investor can expect to invest in a company in order to receive one dollar of that company’s earnings

Market Value per Share ÷ Earnings per Share

Market Value (Investor Perspective)

Income Statement, Market Valuation

Dividend Yield

Financial ratio that shows how much a company pays out in dividends each year relative to its stock price

Annual Dividends per Share ÷ Price per Share

Market Value (Investor Perspective)

Income Statement, Market Valuation