Free Financial Ratios tutorial, 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 used to try to evaluate the overall financial condition of a corporation or other organization.What are the five financial ratios?
There are five basic ratios that are often used to pick stocks for investment portfolios. These include price-earnings (P/E), earnings per share, debt-to-equity and return on equity (ROE)
In general, financial ratios can be broken down into four main categories—1) profitability or return on investment; 2) liquidity; 3) leverage, and 4) operating or efficiency—with several specific ratio calculations prescribed within each.What are ideal financial ratios?
#1 – Current Ratio
The Current ratio. Current ratio = current assets/current liabilities read more is referred to as a working capital ratio or banker's ratio. ... The ratio of 1 is considered to be ideal that is current assets. It comprises inventory, cash, cash equivalents, marketable securities, accounts receivable,