Ratios — Excel guide
Ratios turn statements into judgments: can they pay their bills, how leveraged are they, and how hard do the assets work. The formulas fit on one card.
Liquidity, can they pay soon?
Quick ratio strips inventory because it's the slowest current asset to become cash.
| Ratio | Formula |
|---|---|
| Current ratio | Current assets ÷ current liabilities |
| Quick ratio | (Current assets − inventory) ÷ current liabilities |
| Working capital | Current assets − current liabilities |
Leverage & coverage
How much of the company the lenders own, and how comfortably earnings cover the interest.
| Ratio | Formula |
|---|---|
| Debt-to-equity | Total liabilities ÷ total equity |
| Times interest earned | EBIT ÷ interest expense |
Profitability & efficiency
Margins read top-down from the income statement; turnover ratios ask how hard the balance sheet works.
| Ratio | Formula |
|---|---|
| Gross margin | Gross profit ÷ revenue |
| ROE | Net income ÷ average equity |
| ROA | Net income ÷ average total assets |
| Asset turnover | Revenue ÷ average total assets |
| Inventory turnover | COGS ÷ average inventory |
| DSO | (A/R ÷ credit sales) × 365 |
| EPS (basic) | Net income to common ÷ weighted-avg shares |