# Category: Financial ratios

Sterling ratio
The Sterling ratio (SR) is a measure of the risk-adjusted return of an investment portfolio. While multiple definitions of the Sterling ratio exist, it measures return over average drawdown, versus th
Theoretical ex-rights price
Theoretical ex-rights price (TERP) is a situation where the stock and the right attached to the stock is separated. TERP is a calculated price for a company's stock shares after issuing new rights-sha
Debt-to-capital ratio
A company's debt-to-capital ratio or D/C ratio is the ratio of its total debt to its total capital, its debt and equity combined. The ratio measures a company's capital structure, financial solvency,
Quick ratio
In finance, the quick ratio, also known as the acid-test ratio is a type of liquidity ratio, which measures the ability of a company to use its near cash or quick assets to extinguish or retire its cu
Return on capital
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relativ
Texas ratio
The Texas ratio is a measure of a bank's credit troubles. The higher the Texas ratio, the more severe the credit troubles. Developed by Gerard Cassidy and others at RBC Capital Markets, it is calculat
Beneish M-score
The Beneish model is a statistical model that uses financial ratios calculated with accounting data of a specific company in order to check if it is likely (high probability) that the reported earning
Envy ratio
Envy ratio, in finance, is the ratio of the price paid by investors to that paid by the management team for their respective shares of the equity. It is used to consider an opportunity for a managemen
Rachev ratio
The Rachev Ratio (or R-Ratio) is a risk-return performance measure of an investment asset, portfolio, or strategy. It was devised by Dr. Svetlozar Rachev and has been extensively studied in quantitati
Calmar ratio
Calmar ratio (or Drawdown ratio) is a performance measurement used to evaluate Commodity Trading Advisors and hedge funds. It was created by Terry W. Young and first published in 1991 in the trade jou
Greeks (finance)
In mathematical finance, the Greeks are the quantities representing the sensitivity of the price of derivatives such as options to a change in underlying parameters on which the value of an instrument
Leverage cycle
Leverage is defined as the ratio of the asset value to the cash needed to purchase it. The leverage cycle can be defined as the procyclical expansion and contraction of leverage over the course of the
Cash return on capital invested
Cash return on capital invested (CROCI) is an advanced measure of corporate profitability, originally developed by Deutsche Bank's equity research department in 1996 (it now sits within DWS Group). Th
Hansen–Jagannathan bound
Hansen–Jagannathan bound is a theorem in financial economics that says that the ratio of the standard deviation of a stochastic discount factor to its mean exceeds the Sharpe ratio attained by any por
Import ratio
Import ratio, in economics and government finance, is the ratio of total imports of a country to that country’s total foreign exchange (FX) reserves. The ratio can be inverted and is referred to as th
Ohlson O-score
The Ohlson O-score for predicting bankruptcy is a multi-factor financial formula postulated in 1980 by Dr. of the New York University Stern Accounting Department as an alternative to the Altman Z-scor
Basic Earnings Per Share
No description available.
Return on modeling effort
Return on modelling effort (ROME) is the benefit resulting from a (supplementary) effort to create and / or improve a model.
Days sales outstanding
In accountancy, days sales outstanding (also called DSO and days receivables) is a calculation used by a company to estimate the size of their outstanding accounts receivable. It measures this size no
Earnings per share
Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company. It is a key measure of corporate profitability and is commonly used to price stocks. In
Gross margin
Gross margin is the difference between revenue and cost of goods sold (COGS), divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item
Like for like
Like for like (LFL) growth is a measure of growth in sales, adjusted for new or divested businesses. This is a widely used indicator of retailers' current trading performance. The adjustment is import
CASA ratio
CASA ratio stands for current and savings account ratio. CASA ratio of a bank is the ratio of deposits in current and saving accounts to total deposits. A higher CASA ratio indicates a lower cost of f
Economy monetization
The Economy monetization is a metric of the national economy, reflecting its saturation with liquid assets. The level of monetization is determined both by the development of the national financial sy
Net capital outflow
Net capital outflow (NCO) is the net flow of funds being invested abroad by a country during a certain period of time (usually a year). A positive NCO means that the country invests outside more than
Omega ratio
The Omega ratio is a risk-return performance measure of an investment asset, portfolio, or strategy. It was devised by Con Keating and William F. Shadwick in 2002 and is defined as the probability wei
Sustainable growth rate
According to PIMS (profit impact of marketing strategy), an important lever of business success is growth. Among 37 variables, growth is mentioned as one of the most important variables for success: m
Altman Z-score
The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The formula may be used to pred
Reserve requirement
Reserve requirements are central bank regulations that set the minimum amount that a commercial bank must hold in liquid assets. This minimum amount, commonly referred to as the commercial bank's rese
Accounting liquidity
In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay their debts as and when they fall due. It is usually expressed as a ratio or a percentage of current l
Social return on investment
Social return on investment (SROI) is a principles-based method for measuring extra-financial value (such as environmental or social value not currently reflected or involved in conventional financial
Financial ratio
A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios
Return on assets
The return on assets (ROA) shows the percentage of how profitable a company's assets are in generating revenue. ROA can be computed as below: This number tells you what the company can do with what it
Price–sales ratio
Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market capitalization by the revenue in the most recent year; or, equivalently, divid
The Market-Adjusted Performance Indicator (MAPI) measures the performance of a company’s management using a relative performance indicator designed to capture management performance as holistically as
Alpha (finance)
Alpha is a measure of the active return on an investment, the performance of that investment compared with a suitable market index. An alpha of 1% means the investment's return on investment over a se
Debt-to-income ratio
In the consumer mortgage industry, debt-to-income ratio (often abbreviated DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts. (Speaking precisely, DTIs often co
Return on tangible equity
Return on tangible equity (ROTE) (also return on average tangible common shareholders' equity (ROTCE)) measures the rate of return on the tangible common equity. ROTE is computed by dividing net earni
Receivables turnover ratio
Receivable Turnover Ratio or Debtor's Turnover Ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio
PEG ratio
The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's ex
Operating leverage
Operating leverage is a measure of how revenue growth translates into growth in operating income. It is a measure of leverage, and of how risky, or volatile, a company's operating income is.
Sortino ratio
The Sortino ratio measures the risk-adjusted return of an investment asset, portfolio, or strategy. It is a modification of the Sharpe ratio but penalizes only those returns falling below a user-speci
Beta (finance)
In finance, the beta (β or market beta or beta coefficient) is a measure of how an individual asset moves (on average) when the overall stock market increases or decreases. Thus, beta is a useful meas
Cash conversion cycle
In management accounting, the Cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in inventory in order to expand customer sales. It is thus a
Days in inventory
Days in inventory (also known as "Inventory Days of Supply", "Days Inventory Outstanding" or the "Inventory Period") is an efficiency ratio that measures the average number of days the company holds i
Dividend cover
Dividend cover, also commonly known as dividend coverage, is the ratio of company's earnings (net income) over the dividend paid to shareholders, calculated as net profit or loss attributable to ordin
Fixed-asset turnover
Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets (on the balance sheet). It indicates how well the business is using its fixed assets to generat
Bias ratio
The bias ratio is an indicator used in finance to analyze the returns of investment portfolios, and in performing due diligence. The bias ratio is a concrete metric that detects valuation bias or deli
Expense ratio
The expense ratio of a stock or asset fund is the total percentage of fund assets used for administrative, management, advertising (12b-1), and all other expenses. An expense ratio of 1% per annum mea
Times interest earned
Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honor its debt payments. It may be calculated as either EBIT or EBITDA divided by the total interest expen
Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR), is the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can
Sales density
Sales density is a measure of performance in retailing. It is the revenue generated for a given area of sales space, and is presented as a monetary value per square metre. The higher the figure, the m
Return of capital
Return of capital (ROC) refers to principal payments back to "capital owners" (shareholders, partners, unitholders) that exceed the growth (net income/taxable income) of a business or investment. It s
Price–earnings ratio
The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share (stock) price to the company's earnings per share. The ratio is used for valuing companies and to find
Sharpe ratio
In finance, the Sharpe ratio (also known as the Sharpe index, the Sharpe measure, and the reward-to-variability ratio) measures the performance of an investment such as a security or portfolio compare
Inventory turnover
In accounting, the inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. It is calculated to see if a business has an excessive inventory in
Net interest spread refers to the difference in borrowing and lending rates of financial institutions (such as banks) in nominal terms. It is considered analogous to the gross margin of non-financial
Dividend yield
The dividend yield or dividend–price ratio of a share is the dividend per share, divided by the price per share. It is also a company's total annual dividend payments divided by its market capitalizat
Cash-flow return on investment
Cash-flow return on investment (CFROI) is a valuation model that assumes the stock market sets prices based on cash flow, not on corporate performance and earnings. For the corporation, it is essentia
Average propensity to consume
Average propensity to consume (as well as the marginal propensity to consume) is a concept developed by John Maynard Keynes to analyze the consumption function, which is a formula where total consumpt
Return on net assets
The return on net assets (RONA) is a measure of financial performance of a company which takes the use of assets into account. Higher RONA means that the company is using its assets and working capita
Leverage (finance)
In finance, leverage (or gearing in the United Kingdom and Australia) is any technique involving borrowing funds to buy things, hoping that future profits will be many times more than the cost of borr
Jaws ratio
The jaws ratio is a measure used in finance to demonstrate the extent to which a trading entity's exceeds its , measured as a percentage. Strictly speaking, it is not a true ratio in that the calculat
Loss ratio
A loss ratio is a ratio of losses to gains, used normally in a financial context. It is the opposite of the gross profit ratio (commonly known as the gross profit margin).
DuPont analysis
DuPont analysis (also known as the DuPont identity, DuPont equation, DuPont framework, DuPont model or the DuPont method) is an expression which breaks ROE (return on equity) into three parts. The nam
Profit margin
Profit margin is a measure of profitability. It is calculated by finding the profit as a percentage of the revenue. There are 3 types of profit margins: gross profit margin, operating profit margin an
AlphaIC
AlphaIC is a method for assessing the value of information technology (IT) investments that surpasses banal ROI analyses and looks at how IT affects an organization's intellectual capital. The methodo
P/B ratio
The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company's current market value to its book value (where book value is the value of all assets minus liabilities owned by a
Buffett indicator
The Buffett indicator (or the Buffett metric, or the Market capitalization-to-GDP ratio) is a valuation multiple used to assess how expensive or cheap the aggregate stock market is at a given point in
EV/GCI
EV/GCI (enterprise value/gross cash invested) is an advanced valuation multiple used to compare a company's book value of its assets to their current market value. The ratio is similar to P/B ratio, b
Incremental capital-output ratio
The Incremental Capital-Output Ratio (ICOR) is the ratio of investment to growth which is equal to the reciprocal of the marginal product of capital. The higher the ICOR, the lower the productivity of
Efficiency ratio
The efficiency ratio indicates the expenses as a percentage of revenue (expenses / revenue), with a few variations – it is essentially how much a corporation or individual spends to make a dollar; ent
Earnings yield
Earning yield is the quotient of earnings per share (E), divided by the share price (P), giving E/P. It is the reciprocal of the P/E ratio. The earning yield is quoted as a percentage, and therefore a
Operating ratio
In finance, the Operating ratio is a company's operating expenses as a percentage of revenue. This financial ratio is most commonly used for industries which require a large percentage of revenues to
Total expense ratio
The total expense ratio (TER) is a measure of the total cost of a fund to an investor. Total costs may include various fees (purchase, redemption, auditing) and other expenses. The TER, calculated by
V2 ratio
The V2 ratio (V2R) is a measure of excess return per unit of exposure to loss of an investment asset, portfolio or strategy, compared to a given benchmark. The goal of the V2 ratio is to improve on ex
Current ratio
The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities, and is expr
Operating margin
In business, operating margin—also known as operating income margin, operating profit margin, EBIT margin and return on sales (ROS)—is the ratio of operating income ("operating profit" in the UK) to n
Net interest margin
Net interest margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for exampl
Rate of return on a portfolio
The rate of return on a portfolio is the ratio of the net gain or loss (which is the total of net income, foreign currency appreciation and capital gain, whether realized or not) which a portfolio gen
Rate of return
In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that inves
EV/Ebitda
Enterprise value/EBITDA (more commonly referred to by the acronym EV/EBITDA) is a popular valuation multiple used to determine the fair market value of a company. By contrast to the more widely availa
Accounting rate of return
Accounting rate of return, also known as the Average rate of return, or ARR is a financial ratio used in capital budgeting. The ratio does not take into account the concept of time value of money. ARR
Debt service coverage ratio
The debt service coverage ratio (DSCR), known as "debt coverage ratio" (DCR), is the ratio of operating income available to debt servicing for interest, principal and lease payments. It is a popular b
The cyclically adjusted price-to-earnings ratio, commonly known as CAPE, Shiller P/E, or P/E 10 ratio, is a valuation measure usually applied to the US S&P 500 equity market. It is defined as price di
Information ratio
The information ratio measures and compares the active return of an investment (e.g., a security or portfolio) compared to a benchmark index relative to the volatility of the active return (also known
Feed ratio
A feed ratio is a measure of profitability of animal husbandry, expressed as the ratio between the cost of food and the price of the final product. For example, in pig farming, the hog/corn ratio is t
Infection ratio
In finance, the infection ratio describes the relationship between non-performing portfolios and the total loan portfolio. The infection ratio is used to work out the relationship between the non-perf
Debt-to-equity ratio
The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is
Statutory liquidity ratio
In India, the Statutory liquidity ratio (SLR) is the Government term for the reserve requirement that commercial banks are required to maintain in the form of cash, gold reserves,Govt. bonds and other
Days payable outstanding
Days payable outstanding (DPO) is an efficiency ratio that measures the average number of days a company takes to pay its suppliers. The formula for DPO is: where ending A/P is the accounts payable ba
Asset turnover
Asset turnover (ATO), total asset turnover, or asset turns is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue or sales income to the company
Effective gross income
Effective gross income is the relationship or ratio between the sale price of the value of a property and its effective gross rental income. The anticipated income from all operations of the real prop
Tobin's q
Tobin's q (or the q ratio, and Kaldor's v), is the ratio between a physical asset's market value and its replacement value. It was first introduced by Nicholas Kaldor in 1966 in his paper: Marginal Pr
Yield gap
The yield gap or yield ratio is the ratio of the dividend yield of an equity and the yield of a long-term government bond. Typically equities have a higher yield (as a percentage of the market price o
Debtor collection period
In accounting the term Debtor Collection Period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency. It enables
Risk-adjusted return on capital (RAROC) is a risk-based profitability measurement framework for analysing risk-adjusted financial performance and providing a consistent view of profitability across bu
Social earnings ratio
The social earnings ratio, sometimes abbreviated to S/E, is a single-number metric, used to measure the social impact of various organisations. The non-financial metric is similar to the price earning
Loan-to-value ratio
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. In Real estate, the term is commonly used by banks and building soc
Put/call ratio
In finance the put/call ratio (or put-call ratio, PCR) is a technical indicator demonstrating investor sentiment. The ratio represents a proportion between all the put options and all the call options
Net income per employee
Net Income per employee (NIPE) is a company's net income divided by the number of employees. This number shows the company how efficient it is with its employees. Theoretically, the higher the net inc
Sustainable return on investment
Sustainable return on investment (S-ROI) is a methodology for identifying and quantifying environmental, societal, and economic impacts of investment in projects and initiatives (e.g., factories, new
Average propensity to save
In Keynesian economics, the average propensity to save (APS), also known as the savings ratio, is the proportion of income which is saved, usually expressed for household savings as a fraction of tota
Average accounting return
The average accounting return (AAR) is the average project earnings after taxes and depreciation, divided by the average book value of the investment during its life.Approach to making capital budgeti
Enterprise value-to-sales ratio
Enterprise value/sales is a financial ratio that compares the total value (as measured by enterprise value) of the company to its sales. The ratio is, strictly speaking, denominated in years; it demon
Cost accrual ratio
The Cost Accrual Ratio for a business is the total average cost per person per unit time, e.g. average cost per day per person. It is only useful for risk assessment in small projects where average wa
Price-to-cash flow ratio
The price/cash flow ratio (also called price-to-cash flow ratio or P/CF), is a ratio used to compare a company's market value to its cash flow. It is calculated by dividing the company's market cap by
Debt ratio
Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt and total assets (the sum of current assets, fixed assets,
Net interest income
Net interest income (NII) is the difference between revenues generated by interest-bearing assets and the cost of servicing (interest-burdened) liabilities. For banks, the assets typically include com
Return on capital employed
Return on capital employed is an accounting ratio used in finance, valuation, and accounting. It is a useful measure for comparing the relative profitability of companies after taking into account the
High-yield stock
A high-yield stock is a stock whose dividend yield is higher than the yield of any benchmark average such as the ten-year US Treasury note. The classification of a high-yield stock is relative to the
Capitalization rate
Capitalization rate (or "cap rate") is a real estate valuation measure used to compare different real estate investments. Although there are many variations, the cap rate is generally calculated as th
Equity ratio
The equity ratio is a financial ratio indicating the relative proportion of equity used to finance a company's assets. The two components are often taken from the firm's balance sheet or statement of
Financial result
The financial result is the difference between earnings before interest and taxes and earnings before taxes. It is determined by the earning or the loss which results from financial affairs.
Treynor ratio
The Treynor reward to volatility model (sometimes called the reward-to-volatility ratio or Treynor measure), named after Jack L. Treynor, is a measurement of the returns earned in excess of that which
Rate of return pricing
Rate of return pricing or Target-return pricing is a method of which a company will set the price of its product based on their desired returns on said product. This method is used primarily by compan
Return on equity
The return on equity (ROE) is a measure of the profitability of a business in relation to the equity. Because shareholder's equity can be calculated by taking all assets and subtracting all liabilitie
Deleveraging
At the micro-economic level, deleveraging refers to the reduction of the leverage ratio, or the percentage of debt in the balance sheet of a single economic entity, such as a household or a firm. It i
Return on brand
The return on brand (ROB) is an indicator used to measure brand management performance. It is an indicator of the effectiveness of brand use in terms of generating net income. In fact, it is a special
Risk return ratio
The risk-return ratio is a measure of return in terms of risk for a specific time period. The percentage return (R) for the time period is measured in a straightforward way: where and simply refer to
Short interest ratio
The short interest ratio (also called days-to-cover ratio) represents the number of days it takes short sellers on average to cover their positions, that is repurchase all of the borrowed shares. It i
Upside potential ratio
The upside-potential ratio is a measure of a return of an investment asset relative to the . The measurement allows a firm or individual to choose investments which have had relatively good upside per
Capital recovery factor
A capital recovery factor is the ratio of a constant annuity to the present value of receiving that annuity for a given length of time. Using an interest rate i, the capital recovery factor is: where
Debtor days
The debtors days ratio measures how quickly cash is being collected from debtors. The longer it takes for a company to collect, the greater the number of debtors days.Debtor days can also be referred
Dividend payout ratio
The dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends: The part of earnings not paid to investors is left for investment to provide for future earnings g
Debt service ratio
In economics and government finance, a country’s debt service ratio is the ratio of its debt service payments (principal + interest) to its export earnings. A country's international finances are heal
Bid-to-cover ratio
Bid-To-Cover Ratio is a ratio used to measure the demand for a particular security during offerings and auctions. In general, it is used for shares, bonds, and other securities. It may be computed in
Total revenue share
The total revenue share is the percentage of direct cost associated with revenue. Direct cost consists of both product cost and marketing cost. It is a ratio of costs required to fulfill an order. The