Business Finance & Ratios Calculator Hub

How to use this business finance & ratios hub

This page brings together the most widely used financial ratios from corporate finance textbooks, lender scorecards, and investor pitch decks. Instead of reading static tables, you can plug in your own numbers and immediately see what each ratio means for your business.

1. Select a ratio category at the top (liquidity, profitability, leverage, efficiency, valuation).
2. Enter your figures directly from your income statement and balance sheet.
3. Click “Calculate” to get the ratio value and a short interpretation.
4. Compare your results over time and against realistic targets for your industry.

Key categories of financial ratios

1. Liquidity ratios

Liquidity ratios answer the question: “Can we pay our bills in the next 12 months?” Lenders and suppliers look closely at these before extending credit.

• Current ratio — a quick health check of short‑term solvency. Values between 1.2 and 2.0 are common for many stable businesses.
• Quick ratio — removes inventory and other less liquid items. Especially important for businesses with slow‑moving stock.

2. Profitability ratios

Profitability ratios show how effectively your business turns sales into profit and how well it uses assets and equity.

• Net profit margin — after all expenses, how much of each dollar of revenue you keep.
• ROA — how efficiently your asset base generates earnings.
• ROE — the return your shareholders earn on their invested capital.

3. Leverage (solvency) ratios

Leverage ratios capture your use of debt and your ability to service it. Banks and bond investors rely heavily on these when assessing risk.

• Debt‑to‑equity — compares borrowed money to owners’ capital.
• Interest coverage — how many times operating profit covers interest expense.

4. Efficiency (activity) ratios

Efficiency ratios track how well you manage working capital: inventory, receivables, and payables. They are critical for cash‑intensive businesses.

• Inventory turnover — how quickly you sell through stock.
• DSO — how long customers take to pay you.

5. Valuation ratios

Valuation ratios are used by investors, acquirers, and founders to benchmark how the market values a business relative to its earnings and cash flows.

• P/E ratio — price per share divided by earnings per share.
• EV/EBITDA — compares the total value of the firm to its operating cash‑flow proxy.

Best practices for ratio analysis

• Look at trends, not single points. A ratio improving or deteriorating over several periods is more informative than a one‑off snapshot.
• Compare to peers. Use industry benchmarks and competitors of similar size and business model.
• Use consistent definitions. For example, always define “debt” the same way when tracking debt‑to‑equity.
• Combine ratios with context. A high debt‑to‑equity may be acceptable in stable, asset‑heavy industries but risky in cyclical sectors.

Limitations and caveats

Financial ratios are powerful, but they are only as good as the underlying data and assumptions. They do not capture qualitative factors like management quality, customer concentration, or regulatory risk.

This tool is for educational and planning purposes only and does not constitute accounting, tax, or investment advice. For high‑stakes decisions, consult a qualified professional who can review your full financial statements.