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ratio analysis

Financial ratios calculator

Enter the balance-sheet and income-statement figures you have. Every ratio is computed from the numbers you provide, with its formula stated next to it.

Short answer: with ₹5,00,000 of current assets against ₹2,50,000 of current liabilities the current ratio is 2.0, the quick ratio 1.6, and with ₹90,000 of net income on ₹12,00,000 of revenue the net margin is 7.5% and ROE 15%.

Liquidity, leverage and profitability

The seven ratios fall into three groups: can the business pay its short-term bills (current and quick), how is it financed (debt to equity), and does it earn (margin, ROA, ROE, coverage). Reading them together is the point — a 15% ROE funded by heavy debt looks very different from the same 15% funded by equity.

Worked example

A firm with ₹80,000 current assets and ₹1,00,000 current liabilities has a current ratio of 0.8 — it cannot cover this year's obligations from this year's liquid assets. That single number usually sends an analyst to the cash-flow statement before anything else.

Financial ratio questions

Which ratios does this compute?

Seven: current ratio, quick ratio, debt to equity, net profit margin, return on assets, return on equity and interest coverage. Each row states its formula, because a ratio without its definition is just a number.

What does the current ratio of 2 mean?

Current assets are twice current liabilities, so short-term obligations are covered twice over. Under 1 is the warning sign: the assets that could be turned into cash within a year do not cover the bills due within a year.

Why is the quick ratio lower?

Inventory is removed from current assets, because stock has to be sold before it becomes cash. A current ratio of 2 with a quick ratio of 1.6 means a fifth of the cover sits in inventory.

Is a high debt to equity bad?

Not by itself. Debt is cheaper than equity and interest is deductible, so leverage raises ROE while things go well. What matters is whether EBIT covers the interest: the coverage ratio below 1.5 is the practical warning line.

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Margin and markup calculatorProduct-level profitability.Break-even calculatorThe volume that covers fixed costs.EOQ calculatorHow much inventory to order at a time.