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
Financial Ratio
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
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 owners'
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 xpenses but before paying interest,
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