Financial Ratio Calculator
Calculate key financial ratios including liquidity, profitability, and leverage ratios for business analysis.
Financial ratios are standardized metrics used to evaluate a company’s performance, financial health, and value. Investors, lenders, and managers use them to make informed decisions.
Key ratio categories:
Liquidity Ratios — measure ability to pay short-term obligations:
Current Ratio = Current Assets / Current Liabilities(healthy: >1.5)Quick Ratio = (Current Assets - Inventory) / Current Liabilities(healthy: >1.0)
Profitability Ratios — measure ability to generate profit:
Gross Margin = (Revenue - COGS) / Revenue × 100%Net Profit Margin = Net Income / Revenue × 100%Return on Assets (ROA) = Net Income / Total Assets × 100%Return on Equity (ROE) = Net Income / Shareholders' Equity × 100%
Leverage Ratios — measure reliance on debt:
Debt-to-Equity = Total Debt / Shareholders' EquityDebt-to-Assets = Total Debt / Total Assets
When to use this calculator:
- Analyzing a company for investment
- Preparing financial reports or business plans
- Comparing companies within the same industry
- Monitoring business health over time
- Loan applications and credit analysis
Practical example: A company with $500,000 in current assets and $300,000 in current liabilities has a current ratio of 1.67, indicating good short-term financial health. If inventory is $100,000, the quick ratio is 1.33.
Industry benchmarks:
| Ratio | Good | Warning | Critical |
|---|---|---|---|
| Current Ratio | >2.0 | 1.0–2.0 | <1.0 |
| Quick Ratio | >1.0 | 0.5–1.0 | <0.5 |
| Gross Margin | >40% | 20–40% | <20% |
| Net Margin | >10% | 5–10% | <5% |
| ROE | >15% | 10–15% | <10% |
| Debt/Equity | <1.0 | 1.0–2.0 | >2.0 |
Tips:
- Always compare ratios to industry averages — what is healthy varies by sector.
- Look at trends over multiple periods rather than a single snapshot.
- Ratios are most useful when comparing similar companies.