What's it: Net profit margin is a profitability ratio to measure how much profit is left (in percent) after the company has covered

# 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

## 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

## 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

## 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

## 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