Standard ratios established in the financial world by which the merits of an opportunity, i.e. project, may be judged or compared. [D02774] RMW
The most common financial ratios are as follows. Definitions for these terms appear in their normal alphabetical sequence in this listing. Operating Ratio, Price/Earning Ratio, Price/Book Ratio, Yield, Yield To Call, Yield To Maturity
Numerical ratios of firm performance such as return on equity, return on assets, and earnings per share.
Ratios based on figures obtained from the firm's financial statements and supposedly reflecting some aspect of the firm's financial condition and performance.
The result of dividing one financial statement item by another. Ratios help interpret financial statements by focusing on specific relationships.
There are two resources in the HBS Toolkit for information about financial ratios: the Financial Ratio Analysis Tool and the Pro forma Self-Instructional Workbook - Ratio Glossary.
Measures of capital, including debt to asset, current, and debt to worth. See individual definitions for "acid," "current," "quick" ratios.
Using debt (such as loans and bonds) to acquire more assets than would be possible by using only owners' funds. To Top
Used to assess performance of businesses overtime and to to compare to others in the same profession. The most important ratios to small businesses are liquidity, efficiency, profitability and solvency.
statistical measures of a firm’s liquidity, profitability, capital adequacy, and asset utilization.
A quantitative measure deduced by dividing one item of financial information by another, the purpose of which is to simplify the interpretation of financial information, examples being interest coverage ratios or gearing ratios.
