What's it: The defensive interval ratio is a financial ratio to measure how long a company can continue to meet daily expenses using existing liquid assets without obtaining additional financing. We calculate it by adding up

# Finance

## Cash Ratio: Formula, Calculation, and Interpretation

What's it: The cash ratio is a financial ratio to measure a company's ability to meet its short-term liabilities. It is the most conservative ratio in measuring liquidity compared to the current ratio or quick ratio. This is

## Cash Conversion Cycle: How it Works, Calculation and Interpretation

What's it: The cash conversion cycle measures how long, in days, it took a company to collect cash since the money was spent on buying raw materials. The shorter the cycle, the faster the company generates cash from its investment in

## Debt-to-Assets Ratio: Calculation and Interpretation

What's it: The debt-to-assets ratio is a leverage ratio to measure the extent to which a company depends on debt to finance its assets. We calculate it by dividing total debt by total assets. Debt is a capital alternative to equity.

## Debt-to-Capital Ratio: How to Calculate and Interpret

What's it: The debt-to-capital ratio is a leverage ratio calculated by dividing the total debt by the company's total capital. Total capital equals total debt plus total equity. A higher ratio indicates high leverage. A company

## Debt-to-Equity Ratio: Calculation and Interpretation

What's it: The debt-to-equity ratio is a leverage ratio by compares the relative proportions of a company's capital structure. Specifically, it measures how much debt capital is compared to equity capital. A higher ratio indicates

## Assets-to-Equity Ratio: Calculation and Interpretation

What's it: The asset-to-equity ratio is a financial ratio indicating the extent to which a company's assets are financed through equity. We calculate it by dividing total assets by equity. We can find this ratio in the

## Interest Coverage Ratio: How to Calculate and Interpret it

What's it: The interest coverage ratio is a financial ratio to measure a company's ability to pay interest expense using the profit it generates. Earnings before interest and tax (EBIT) is a commonly used profit metric. It is

## Return on Equity (ROE): Calculation and Interpretation

What's it: Return on equity (ROE) is a profitability ratio to measure how high the return is on the invested equity capital. We get it by dividing net income by total equity, expressed as a percentage. Also known as return on

## Operating Profit Margin: Formula, Calculation and Interpretation

What's it: Operating profit margin is a profitability ratio to measure the percentage of profit a company generates from its core business. It tells us how much profit the company makes after paying operating expenses but

## Gross Profit Margin: Formula, Calculation, and Interpretation

What's it: Gross profit margin or gross margin is a financial ratio to measure a company's profitability, calculated by dividing gross profit by revenue. We get gross profit by subtracting the cost of goods sold from

## EBITDA Margin: Formula, Calculation, and Interpretation

What's it: EBITDA margin is a profitability ratio to measure how much a company profits from recorded revenue after adjusting for non-cash items but before paying interest and taxes. We calculate it by dividing EBITDA by