Financial Ratios

Net Operating Assets: Definition, Formula, Usages, and Limitation

Definition: Net Operating Assets can be defined as the assets within a business that is related to the operations of the business. It is defined as the difference between the operating assets of the company and the operating liabilities of the company. Net Operating Assets represent how many assets and liabilities the business has at …

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Degree Of Operating Leverage: Explanation, Formula, Example, and More

There are many different methods to do the financial analysis of a company. Ratio analysis is the most commonly used method for assessing a firm’s financial health, profitability, and riskiness. Most investors and third-party stakeholders use the most common financial ratios for measures, including return on equity, price to earnings, and financial leverage. Operating leverage …

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What are the Gearing Ratios? Definition, Formula, And Is It similar to Debt-Equity Ratio?

Definition and Explanation The gearing ratio is the group of financial ratios that compares the owner’s equity in the company, debt, or the number of funds the company borrows. Gearing can be defined as a metric that measures the company’s financial leverage. The key four ratios include Time Interest Earned, Equity Ratio, Debt Ratio, and …

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What is Annualized Total Return? And How to Calculate it?

Investors can hold several assets as a part of their portfolio. Usually, these assets come from various classes. Investors invest in those classes to ensure they can achieve diversification in their portfolios. However, achieving a diversified portfolio isn’t the only crucial factor when choosing assets. Investors also consider the risks and returns associated with their …

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What is the Advertising to Sales Ratio? And How to Calculate It?

Financial ratios are numerical values that calculate the relative magnitude of one financial figure to another. Usually, it looks at the comparison between two financial items. These items may relate to the balance sheet or income statement. In some instances, they may also consider the statement of cash flow figures. However, these ratios reveal more …

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How to Calculate Activity Ratios?

Accounting ratios compare the relative magnitude of a financial figure to another. These ratios help stakeholders understand a company’s operations better. In most circumstances, accounting ratios require metrics from financial statements. However, these metrics may not provide crucial information on their own. Therefore, by putting them through these ratios, stakeholders can obtain better insights into …

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What Is a Good Acid Test Ratio? Here Is What You Should Know

Accounting ratios are metrics that allow stakeholders to calculate the relative magnitude of two selected values. These values come from a company’s financial statements, usually the balance sheet and income statement. Usually, stakeholders use various accounting ratios, which fall under several categories. For example, these may include liquidity, profitability, leverage, etc. In most circumstances, accounting …

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What is the Book-to-Bill Ratio? (Formula, Calculation, and Example)

For companies, calculating and analyzing metrics provides meaningful information about various aspects. Companies use metrics to measure their performance in various fields. Similarly, these metrics help them determine how they are doing compared to historical information or other companies. The use of these tools differs from one company to another. Similarly, over time the requirements …

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How To Calculate Coefficient Of Correlation? (Explanation)

Statistics have extensive implications in every field and industry, from pharmaceuticals to sports. On one side, the probability is used to find the chances of the desired outcome in sports; the statistical analysis guides the data collection and analysis in a census. Similarly, the financial management of any business entity is incomplete without statistical analysis. …

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