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 |