Exemplary Types Of Financial Ratios And Their Formulas

Leverage ratios are also referred to as debt ratios debt-to-equity ratios and interest-coverage ratios The debt ratio compares a businesss debt to its assets as a whole.

Types of financial ratios and their formulas. Years needed to double your investment 72 compound interest rate per year 10. Accounting ratios measuring profitability are known as Profitability Ratio. Ratios help in interpreting the financial data and taking decisions accordingly.

The debt ratio indicates how much debt the firm is using to purchase assets. Liquidity ratios solvency ratios turnover ratios profitability ratios. Common financial leverage ratios are the debt to equity ratio and the debt ratio.

Summary of Financial Ratio Calculations This note contains a summary of the more common financial statement ratios. Inventory Turnover Ratio Inventory Turnover Ratio Inventory Turnover Ratio is a measure to determine the efficiency of a Company concerning its overall inventory management. Debt to equity refers to the amount of money and retained earnings invested in the company.

Debt-to-Equity Ratio Liabilities Total Shareholder Equity Total 2. Similar to the total debt ratio this formula lets you see your assets available because of debt for longer than a one-year. List of Top 28 Financial Ratios with Formulas Types.

This article throws light upon the four main types of financial ratios. Calculations vary in practice. Long-Term Debt Ratio Long-Term Debt Long-Term Debt Total Equity.

Structural ratios are based on the proportions of debt and equity in the capital structure of the firm whereas coverage ratios are derived from the relationship between debt servicing commitments and sources of funds for meeting theses obligation. In general financial ratios can be broken down into four main categories. There are two types of leverage ratios.