What's it: Net profit margin is a profitability ratio to measure how much profit is left (in percent) after the company has covered all
Financial Ratio
Efficiency Ratio: Type, Formula, Interpretation
What's it: An efficiency ratio is a financial ratio to show us how well a company utilizes its assets in relation to its ability to generate
Activity Ratio: Types, Formulas, and Interpretations
What's it: Activity ratio is a financial ratio to measure how well a company manages its assets. We then relate it to revenue or expenses to pay
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Cash Flow Ratios: Examples, Formulas, and Interpretations
What's it: Cash flow ratios are financial ratios calculated by comparing the metrics in the cash flow statement with other items in the
Liquidity Ratio: Examples, Formulas, How to Calculate
What's it: The liquidity ratio is a financial ratio to measure a company's ability to meet its short-term obligations. Commonly used ratios are
Valuation Ratio: Formula And Its Interpretation
What's it: A valuation ratio is a financial ratio in which we relate a company's financial soundness to its market value. We use it to
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Financial Ratios For Credit Rating Analysis
Financial ratios for credit rating analysis usually focus on answering the question, "how capable is the company generating sufficient cash flow to
Days Sales Outstanding: Formula, How to Calculate and Read It
What's it: Days sales outstanding (DSO) is a financial ratio to measure how many days on average it takes the company to collect on
Inventory Turnover Ratio: Formula, Calculation and How to Read It
What's it: Inventory turnover ratio is a financial ratio to show the number of times companies convert their inventory into sales
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Solvency Ratio: Formulas, Examples, and Calculations
What's it: The solvency ratio is a financial ratio to measure a company's ability to meet its long-term obligations. To calculate it, we divide
Current Ratio: How to Calculate and Interpret
What's it: The current ratio is a financial ratio to measure liquidity by considering all short-term assets and liabilities. It is the
Quick Ratio: Formula, Calculation, Interpretation
What's it: The quick ratio is a financial ratio to measure liquidity by excluding some less liquid accounts such as inventory. It tells
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Working Capital Turnover: Formula, Calculation, and Interpretation
What's it: Working capital turnover is a financial ratio to measure how efficiently companies use their working capital to generate
Days Payable Outstanding: How to Calculate and Interpret it
What's it: Days payable outstanding (DPO) is a financial ratio showing how many days on average it takes a company to pay its
Accounts Payable Turnover Ratio: How To Calculate And Read It
What's it: The accounts payable turnover ratio is a financial ratio showing the number of times a company pays its suppliers over a
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Days of Inventory on Hand: Formula and How to Calculate
What's it: Days of inventory on hand (DOH) is a financial ratio showing how many days on average a company converts its inventory into