What's it: The asset turnover ratio is a financial ratio to measure the overall efficiency of business operations. It shows how well the company utilizes its resources to generate revenue. We divide revenue by the average total assets

# Finance

## Defensive Interval Ratio: Importance, Calculation, and Interpretation

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 liquid

## 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 because it

## 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 selling

## 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. When a

## 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 depends more

## 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 higher

## 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 DuPont

## 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 then