Financial statements
Ratio analyser
Compute liquidity, profitability, efficiency and leverage ratios and read what they say.
High volume, thin margins, cash sales, suppliers paid on credit. Loading replaces the figures below; you can then edit any of them.
- Gross profit
- 11,500,000
- Operating profit
- 1,700,000
- Profit for the year
- 1,035,000
- Current assets
- 5,650,000
- Purchases (cost of sales + closing − opening inventory)
- 36,700,000
| Ratio | Result | What it says |
|---|---|---|
| Current ratioCurrent assets ÷ current liabilities | 0.78 : 1 | Current assets cover obligations due within a year 0.78 times — less than once, so the business relies on cash still to be generated or refinanced. |
| Quick ratio(Current assets − inventory) ÷ current liabilities | 0.35 : 1 | Without selling any inventory, liquid assets cover current liabilities 0.35 times. |
| Gross marginGross profit ÷ revenue | 23.96% | Each 100 of sales leaves 23.96 after the direct cost of what was sold. |
| Net marginProfit for the year ÷ revenue | 2.16% | Each 100 of sales leaves 2.16 of profit after all expenses, interest and tax. |
| Return on equityProfit ÷ average equity | 17.69% | Shareholders earned 17.69 for every 100 of equity invested on average during the year. |
| Return on assetsProfit ÷ average total assets | 5.73% | The asset base generated 5.73 of profit per 100 of assets. |
| Debt to equityBorrowings ÷ equity | 0.66 : 1 | Lenders have provided 0.66 of borrowing for every 1 of equity. |
| Interest coverOperating profit ÷ interest expense | 5.31× | Operating profit covers the interest bill 5.31 times. |
| Asset turnoverRevenue ÷ average total assets | 2.66× | Each 1 of assets supported 2.66 of sales. |
| Inventory turnoverCost of sales ÷ average inventory | 12.17× | Inventory was sold and replaced about 12.17 times in the year. |
| Receivable daysReceivables ÷ revenue × 365 | 1.9 days | Customers take about 2 days on average to pay. |
| Inventory daysInventory ÷ cost of sales × 365 | 31.0 days | Goods sit in stock for about 31 days before they are sold. |
| Payable daysPayables ÷ purchases × 365 | 53.7 days | Suppliers are paid after about 54 days. |
| Cash conversion cycleInventory days + receivable days − payable days | −20.8 days | Negative: suppliers are paid about 21 days after cash comes in from customers, so suppliers fund working capital. |
Read ratios in context
There is no universally good value. What is normal depends on the industry, the business model and the point in the cycle: a grocer may operate comfortably on thin margins and a negative cash conversion cycle, while the same figures could signal strain elsewhere. The presets are fictional and are not benchmarks. Compare with the same company over time and with close peers, and check how each figure was measured.
Learn it properly
- Financial statement analysis with ratios · Financial Statements
- Working capital management · Budgeting and Performance Management
- KPIs and management reporting · Budgeting and Performance Management
- Financial analyst accounting assessment · Accounting Career and Interview Preparation
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