Ratio analysis turns financial statements into comparable measures of liquidity, solvency, efficiency and return. Enter thirteen key lines from the balance sheet and income statement to see the full ratio set in one view.
How it works
Enter key balance sheet and income statement lines to calculate liquidity, leverage, efficiency and profitability ratios in one view.
DuPont: ROE = Net margin × Asset turnover × Equity multiplier
DSO = 365 ÷ (Revenue ÷ AR)
DIO = 365 ÷ (COGS ÷ Inventory)Common uses
- Credit analysis and lender reviews
- Peer benchmarking and trend analysis
- Due diligence and management reporting
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Revenue | $48,500,000 |
| Cost of goods sold | $29,100,000 |
| Operating income (EBIT) | $5,820,000 |
| Interest expense | $1,150,000 |
| Net income | $3,480,000 |
| Cash & equivalents | $4,200,000 |
| Accounts receivable | $6,380,000 |
| Inventory | $5,150,000 |
| Total current assets | $16,900,000 |
| Total assets | $52,400,000 |
| Total current liabilities | $9,850,000 |
| Total liabilities | $30,700,000 |
| Total equity | $21,700,000 |
| Return on equity | 16.0% |
| Current ratio | 1.72× |
| Debt-to-equity | 1.41× |
| Net margin | 7.2% |
| Interest coverage | 5.06× |
Ratios use period-end balances; for turnover ratios, average balances give a more precise measure.
Interpreting the results
- Benchmark ratios against industry peers and your own trend; there is no universal “good” value.
- Liquidity ratios matter most to short-term creditors; leverage and coverage ratios to lenders and bond covenants.
- Use the DuPont identity to explain what drives a change in ROE: margin, asset efficiency, or leverage.
Frequently asked questions
What is a healthy current ratio?
A current ratio between 1.2× and 2.0× is typical for many industries, but the right level depends on the operating cycle. Businesses that collect cash quickly can operate safely below 1.0×, while slow-collecting businesses need more cushion.
Should I use year-end or average balances?
Average balances are more accurate for ratios that compare a flow (revenue or income) with a stock (assets, receivables or equity). Year-end balances are acceptable for quick analysis when the balance sheet is stable.
How should ratios be benchmarked?
Compare each ratio against the company’s own history and against industry peers of similar size. A single ratio rarely tells the full story; read liquidity, leverage, efficiency and return together.
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