Liquidity Ratios
Liquidity ratios assess a company's ability to meet short-term financial obligations.
Common examples include the current ratio and quick ratio.
EZPOHUB FINANCE GUIDE
Finance Ratio Analysis
A practical guide to financial ratios, formulas, calculations and interpretation for students and aspiring finance professionals.
FINANCIAL ANALYSIS
What is financial ratio analysis?
Financial ratio analysis is a method of evaluating a company's financial performance and position by comparing figures from its financial statements.
Ratios can help analyse liquidity, profitability, solvency, efficiency and other aspects of financial performance.
At EzpoHub, the goal is to make financial ratio analysis practical and easier to understand for finance students, accounting learners and professionals.
KEY RATIO CATEGORIES
Four important areas of ratio analysis
Profitability Ratios
Profitability ratios help evaluate how effectively a business generates profit from revenue, assets or equity.
Examples include net profit margin, return on assets and return on equity.
Solvency Ratios
Solvency ratios examine a company's long-term financial stability and ability to meet its long-term obligations.
Examples include debt-to-equity and debt ratios.
RATIO FORMULAS
Common financial ratio formulas
Current Ratio
Current Ratio = Current Assets ÷ Current Liabilities
Net Profit Margin
Net Profit Margin = Net Profit ÷ Revenue × 100
Return on Equity
ROE = Net Income ÷ Shareholders' Equity × 100
EZPOHUB RESOURCES
Take your ratio analysis further.
Use EzpoHub's practical finance resources to study, calculate and interpret financial ratios.
Finance Ratio Quick Notes
Quick revision notes covering key financial ratios and their interpretation.
Open Ratio Notes →Finance Ratio Calculator
Use a practical spreadsheet to calculate common financial ratios.
Open Ratio Calculator →Ultimate Ratio Analysis Blueprint
A detailed practical guide covering financial ratio calculations and interpretation.
Get the Blueprint →
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