What is Financial Ratios?


Financial Ratios are mathematical comparison of financial statement. Key financial ratios are used to measure, analyze and understand the financial results and trends over time. Investors and Lenders look for the key indicators such as "Return on Investments (ROI), Current Ratio, Profit Margin, Debt to Equity (D/E) Ratio, Earnings Per Share (EPS), Dividend Payout Ratio and Price to Earnings (P/E) Ratio" to make better business & investment decisions.



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Financial ratios are easy to understand and simple to compute, it is often benchmarked against past performance, Industry, Sectors and another company. Most ratios can be calculated from information provided by the financial statements.

Financial ratios are broadly categorized in 5 types:

  1. Profitability Ratios
    Profitability ratios are used to assess the company's ability to generate earnings relative to its associated expenses. A business with a higher value of return (profit) during a given period does not guarantee that it is profitable? it is better to compare with past performance that may be far more informative. Commonly used profitability ratios are Profit Margin, Return on Assets (ROA) and Return on Equity (ROE). Learn more…
  2. Liquidity Ratios
    Liquidity ratios are used to determine a company's ability to pay short and long-term liabilities (Loans/Bills payable). Generally, Small and Start-up businesses tend to have difficulties in paying their bills - Investors or Lenders use "Liquidity ratios - Current ratio, Quick ratio, Cash ratio and Net working capital ratio" to analyze the financial health of a business before taking their investing or lending decision. Learn more…
  3. Efficiency (Activity) Ratios
    Efficiency ratios also called activity ratios is used to measure a company's ability in managing its assets - cash, debt, inventory, materials and other capital assets to turn them into sales or earnings. Financial analysts use "Activity Ratios - Account Receivable Turnover Ratio, Inventory Turnover Ratio and Total Assets Turnover Ratio" to assess the operational efficiency. Learn more…
  4. Financial Leverage Ratios
    Financial leverage ratios are used to measure a company's long-term debt usage. Some of the commonly used ratios - Debt ratio, Debt to Equity ratio and interest coverage ratio. Debt to equity ratio or Debt ratios measure the extent to which the company is using long term-debt. Interest coverage ratio indicates how well the company's earning can cover the interest payments on its debt. Learn more…
  5. Market Prospect Ratios
    Market prospect ratios are used to determine the company's performance from an investors perspective. Commonly used ratios are Earnings per share (EPS), Dividend payout ratio, Price to earnings (P/E) ratio, Market value per share and Book value per share. These ratios are employed by current and potential investors to determine whether a company's shares are over-priced or under-priced. Learn more…

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What is Loan Calculator?


Loan calculators help users / borrowers to estimate - monthly payments, cost of the loan (Interest) and term required to repay the loan. A loan calculator factors in the repayment of interest and principal on the loan to determine how long it will take to pay off. Here are the most commonly used loan calculators:

  1. Mortgage Loan Calculator
    A house is the largest purchase most of us will ever make! It is important to estimate the mortgage payment. "Mortgage Loan" is a loan obtained from financial institution or bank to purchase a property or real estate on lien that becomes void upon payment. Try our mortgage loan calculator to estimate the mortgage payments - Monthly Payment, Total Interest, Total Principal and Total Payments. Learn more…
  2. Auto Loan Calculator
    Commute is the most important part of us! It is important to calculate the cost of auto loan before you make the purchase decision. "Auto Loan" is a loan obtained from financial institution or bank to purchase a vehicle on lien that becomes void upon payment. Try our auto loan calculator to estimate the loan payments - Monthly Payment, Total Interest, Total Principal and Total Payments. Learn more…
  3. Personal Loan Calculator
    You may be looking for personal loan for your next dream vacation, home renovation, wedding or any other personal reason. It is important to know the cost of your loan to make your decision! "Personal Loan" is an unsecured loan obtained from financial institution or bank to meet personal needs. Try our personal loan calculator to estimate the loan payments - Monthly Payment, Total Interest, Total Principal and Total Payments. Learn more…
  4. Credit Card Balance Payoff Calculator
    Most of us make purchase using a credit card for personal or business purpose. In case, payment is not made on statement due date, it is going hurt financially. It is important to determine how many months it will take to pay off the balance. Try our credit card payoff calculator to estimate, how long it will take to pay off and what will be interest cost? Learn more…

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