The ultimate cheat sheet of financial ratios including profitability, liquidity, efficiency, and valuation metrics.
Financial ratios are the backbone of fundamental analysis. Whether you're evaluating a company for investment, building a financial model, or preparing for a finance interview, these 50 ratios are essential.
1. Gross Margin = (Revenue - COGS) / Revenue × 100. Measures production efficiency. 2. Operating Margin = EBIT / Revenue × 100. Shows operational efficiency. 3. Net Profit Margin = Net Income / Revenue × 100. Bottom-line profitability. 4. EBITDA Margin = EBITDA / Revenue × 100. Cash flow proxy. 5. Return on Equity (ROE) = Net Income / Shareholders' Equity × 100. Measures return to shareholders.
6. Return on Assets (ROA) = Net Income / Total Assets × 100. 7. Return on Invested Capital (ROIC) = NOPAT / Invested Capital × 100. 8. Return on Capital Employed (ROCE) = EBIT / Capital Employed × 100.
9. Current Ratio = Current Assets / Current Liabilities. Should be > 1.5. 10. Quick Ratio = (Current Assets - Inventory) / Current Liabilities. More conservative. 11. Cash Ratio = Cash / Current Liabilities. Most conservative liquidity measure.
12. Inventory Turnover = COGS / Average Inventory. 13. Receivables Turnover = Revenue / Average Accounts Receivable. 14. Payables Turnover = COGS / Average Accounts Payable. 15. Asset Turnover = Revenue / Total Assets. 16. Days Sales Outstanding (DSO) = 365 / Receivables Turnover. 17. Days Inventory Outstanding (DIO) = 365 / Inventory Turnover.
18. Debt-to-Equity (D/E) = Total Debt / Total Equity. 19. Debt-to-Assets = Total Debt / Total Assets. 20. Interest Coverage = EBIT / Interest Expense. Should be > 3x. 21. Debt-to-EBITDA = Total Debt / EBITDA. The lower, the better.
22. P/E Ratio = Market Price / Earnings Per Share. 23. P/B Ratio = Market Price / Book Value Per Share. 24. EV/EBITDA = Enterprise Value / EBITDA. 25. P/S Ratio = Market Cap / Revenue. 26. PEG Ratio = P/E / Earnings Growth Rate.
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