Financial ratio - Definition and Overview

A financial ratio is a ratio of two numbers of reported levels or flows of a company. It may be two financial flows categories divided by eachother (profit margin, profit/revenue). It may be a level divided by a financial flow (price/earnings). It may be a flow divided by a level (return on equity or earnings/equity). The numerator or denominator may itself be a ratio (PEG ratio).

Ratios

Flow-to-flow

• Efficiency ratio
• Gross margin
• Operating leverage
• Operating margin
• Profit margin (return on sales)

Level-to-level

• Debt to equity ratio
• Shareholders' equity ratio (shareholders' equity / all equity (shareholder's equity and all others' equity))

Ratio-to-ratio

• Price, earnings, growth ratio (PEG ratio)

To cash flow

• Cash flow return on investment (CFROI)
• Cash return on gross investment (CROGI)

To earnings

• Return on assets (ROA)
• Return On Equity (ROE)
• Return On Capital (ROC)
  • Risk Adjusted Return On Capital (RAROC)
• Return On Capital Employed (ROCE)
• Return On Investment (ROI)
• Return On Net Assets (RONA)
• Return on revenue (ROR) (return on sales) (ROS)

To market cap

• Price/earnings ratio
• Price/sales ratio
• Price/tangible assets ratio
• Price/intangible assets ratio
• Price/equity ratio ("price/book ratio")

See also

• Business valuation
• Fundamental analysis
• Market-based valuation
• Profitability

Lists

• List of finance topics#valuation