Most Common Ratios

See Dentist Industry for additional customized ratios

See Law Firm Industry for additional customized ratios

Accounts Payable Days Ratio
Accounts payable/ COGS x 365, Average number of days a firm takes to pay for items purchased.

Accounts Payable Turnover 

Cost of sales/ Accounts payable (either the ending balance or average balance). This ratio measures how effective management is in paying its suppliers.

Accounts Receivable Days Ratio 

Accounts receivable/ Sales x 365. Average number of days a firm takes to collect payments on goods sold.

Accounts Receivable Turnover 

Sales/ Accounts receivable (either the ending balance, or average balance). This ratio measures how effective the company's credit policies are.

Administration Cost Ratio 

Administration costs/ Sales. This margin shows the general overhead cost for each dollar of sales.

Asset Turnover Ratio 

Sales/ Total assets. This ratio shows how effective the company is in generating sales from its assets.

Average Balance 

(Opening balance - Closing balance)/ 2. This balance can be used to calculate efficiency / turnover ratios instead of using a closing balance.

Coverage Ratios 

Ratios that analyze a company's liquidity or its ability to "cover" its financial debt obligations. An example of a coverage ratio is EBITDA / Interest expense.

Current Ratio 

Current assets/ current liabilities. This ratio measures short term liquidity whether a company will have the ability to cover its obligations in the short term.