Financial Ratio Analysis Calculator
Analyze liquidity, profitability, leverage, efficiency, and market ratios. Compare to industry benchmarks with radar, bar, and doughnut charts.
Why This Matters for Your Finances
Why: Financial ratios reveal liquidity, profitability, leverage, and efficiency. Comparing to industry benchmarks helps identify strengths and areas for improvement. Essential for investors, lenders, and management.
How: Current ratio = CA ÷ CL. ROE = Net Income ÷ Equity. Debt-to-equity = Liabilities ÷ Equity. P/E = Price ÷ EPS. Each ratio has industry-specific benchmarks.
- ●Current ratio above 1.5 is generally healthy; quick ratio excludes inventory.
- ●ROE 15%+ is strong; debt-to-equity below 1 is conservative.
- ●Compare ratios to industry benchmarks for meaningful analysis.
🎯 Sample Scenarios — Click to Load
Balance Sheet Items
Income Statement Items
Market & Ownership
Select Industry for Benchmark Comparison
📐 Calculation Breakdown
Financial Health Overview
Multi-dimensional view of your company's financial health across key ratio categories
Benchmark Comparison
Capital Structure
⚠️For educational purposes only — not financial advice. Consult a qualified advisor before making decisions.
💡 Money Facts
Current ratio above 1.5 is generally healthy.
ROE 15%+ is strong; 10–15% is good.
Debt-to-equity below 1 is conservative; above 2 may indicate risk.
P/E varies by industry—compare to peers.
📋 Key Takeaways
- • Liquidity ratios (current, quick, cash) measure ability to pay short-term debts; current ratio > 1.0 is generally healthy.
- • Profitability ratios (gross margin, net margin, ROE, ROA) show how well the company generates profits from sales and assets.
- • Leverage ratios (debt-to-equity, interest coverage) indicate financial risk; lower debt and higher coverage are typically better.
- • Compare to industry benchmarks—ratios vary by sector; a current ratio of 1.5 may be excellent for retail but low for tech.
💡 Did You Know?
📖 How It Works
Financial ratio analysis compares items from the balance sheet, income statement, and market data to evaluate a company's liquidity, profitability, leverage, efficiency, and valuation. Ratios transform raw numbers into comparable metrics that reveal strengths, weaknesses, and trends.
1. Liquidity Ratios
Current assets ÷ current liabilities (current ratio); (current assets − inventory) ÷ current liabilities (quick ratio). Higher values indicate stronger ability to pay short-term debts.
2. Profitability & Leverage
Gross margin = (sales − COGS) ÷ sales; ROE = net income ÷ equity; debt-to-equity = total liabilities ÷ equity. Compare to industry benchmarks for context.
3. Efficiency & Market Ratios
Asset turnover = sales ÷ total assets; inventory turnover = COGS ÷ inventory; P/E = price per share ÷ EPS. These show how well assets are used and how the market values the company.
🎯 Expert Tips
📊 Compare to Peers
Always compare ratios to industry benchmarks and competitors. A ratio in isolation can be misleading.
📈 Trend Analysis
Look at ratios over 3–5 years. Improving trends indicate positive momentum; declining trends signal risk.
🔗 Ratio Relationships
High ROE with high debt may indicate leverage risk. Analyze ratios together, not in isolation.
🏭 Industry Context
Different industries have different norms. Use the industry selector to compare against relevant benchmarks.
⚖️ This Calculator vs Alternatives
| Feature | This Calculator | Manual Spreadsheet | Vendor Tools |
|---|---|---|---|
| All Ratio Categories | ✅ Liquidity, profitability, leverage, efficiency, market | ⚠️ Error-prone formulas | ⚠️ Often limited |
| Industry Benchmarks | ✅ 5 industries, radar + bar comparison | ❌ Manual lookup | ⚠️ May require subscription |
| Visual Analysis | ✅ Radar, bar, doughnut charts | ❌ Manual charting | ⚠️ Varies |
| Interpretation | ✅ Excellent/good/fair/poor labels | ❌ Manual judgment | ⚠️ May not include |
❓ Frequently Asked Questions
What is a good current ratio?
Generally 1.0 or higher indicates the company can cover short-term debts. Industry norms vary: retail ~1.5, manufacturing ~1.8, technology ~2.5. Too high may indicate inefficient use of assets.
What is a good debt-to-equity ratio?
Lower is typically better for risk. Tech firms often have 0.3–0.5; manufacturing 0.6–0.8; utilities may exceed 1.5. Compare to industry peers.
What does ROE tell you?
Return on Equity measures profit generated per dollar of shareholder investment. ROE above 15% is generally strong. High ROE with high debt may indicate leverage risk.
What is a good P/E ratio?
Typical range is 15–25 for mature companies. Growth stocks may trade at 30–50+. Very high P/E can mean overvaluation or high growth expectations.
How do I interpret the quick ratio?
Quick ratio excludes inventory (current assets − inventory) ÷ current liabilities. A ratio of 1.0+ is generally healthy. More conservative than current ratio.
What is interest coverage?
Operating income ÷ interest expense. Measures ability to pay interest. Below 1.5x is concerning; 2x+ is generally safe.
Why compare to industry benchmarks?
Ratios vary by industry. A current ratio of 1.2 might be excellent for restaurants but poor for tech. Always use industry context.
What is asset turnover?
Net sales ÷ total assets. Measures how efficiently assets generate sales. Higher is better. Retail ~1.6, manufacturing ~1.2, services ~2.0.
What is gross margin?
(Net sales − COGS) ÷ net sales. Shows profitability after direct production costs. Varies by industry: tech 70%, retail 35%, manufacturing 30%.
📊 Financial Ratios by the Numbers
📚 Official Sources
⚠️ Disclaimer: This calculator provides estimates for educational purposes. Financial ratios should be interpreted with industry context and qualitative factors. Past performance does not guarantee future results. We are not financial advisors. Consult a professional for investment decisions.