Financial Ratio Calculator

Liquidity, leverage, profitability and efficiency from one set of figures.

Enter what you have from the balance sheet and profit and loss account. Every ratio it can compute will appear; the rest stay out of the way.

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Ratios describe, they do not explain

A current ratio of 0.8 tells you short-term obligations exceed short-term assets. It does not tell you whether that is a supermarket collecting cash daily or a manufacturer about to miss payroll. Read ratios against the sector and against the cash flow statement.

The ones lenders look at

Current ratio, debt to equity and interest cover, in that order. A weak current ratio with strong operating cash flow gets a different reception from a weak current ratio with weak cash flow.

Working capital ratios

Debtor days and inventory days convert balance sheet numbers into time, which is usually more revealing. Ninety days of debtors is money sitting with customers, and it has a cost whether or not anyone books it.

Frequently asked questions

What is a good current ratio?
Between 1.5 and 3 for most businesses. Much higher can mean idle assets; much lower can mean strain.
Should I use average or closing balances?
Averages are more accurate for turnover and return ratios, especially where the business grew during the year. Closing balances are what most published ratios use.
Why is return on equity high when profit is low?
Usually because equity is small. High leverage flatters return on equity while raising risk.