About Financial Ratio Calculator

Calculate ROE, ROA, profit margins, debt ratios, and efficiency metrics. Part of the DevTools Surf developer suite. Browse more tools in the Calculators collection.

Use Cases

• Analyze a company's financial health before a supplier or credit decision
• Benchmark a startup's unit economics against public comparables
• Identify trends in profitability, liquidity, or leverage over multiple periods
• Prepare financial analysis for investor presentations or board reporting

Tips

• Enter balance sheet and income statement figures from the same reporting period — mixing quarters and years produces meaningless ratios
• Use the industry benchmark toggle to compare your ratios against sector medians (retail, manufacturing, SaaS) — a ratio is only meaningful in context
• The DuPont decomposition panel breaks ROE into profit margin, asset turnover, and leverage — pinpointing which driver is responsible for a change in ROE

Fun Facts

• The DuPont analysis framework was developed by F. Donaldson Brown, a finance executive at DuPont Chemical, in 1914. It breaks ROE into three multiplicative components, enabling management to identify which operational lever (margin, efficiency, or leverage) is driving returns.
• The Altman Z-score (1968), developed by NYU professor Edward Altman, uses five financial ratios to predict corporate bankruptcy probability within 2 years. It correctly predicted 72% of 66 companies that went bankrupt in its original study — still cited in credit analysis 55 years later.
• Current ratio, quick ratio, and cash ratio are the three primary liquidity ratios. During the 2008 financial crisis, many investment banks with apparently healthy current ratios (including Lehman Brothers) failed because their liquid assets were concentrated in mortgage-backed securities that became illiquid — illustrating why ratio analysis requires contextual judgment.

FAQ

What financial ratios should I calculate first?

Start with: Current Ratio (liquidity, target >1.5), Debt-to-Equity (leverage, varies by industry), Gross Margin % (pricing power), Net Margin % (overall profitability), and Return on Equity (ROE). These five ratios give a broad picture of financial health.

What is a good current ratio?

A current ratio above 1.0 means current assets exceed current liabilities — the company can pay short-term debts. 1.5-3.0 is generally considered healthy. Below 1.0 suggests potential liquidity issues. Above 5.0 may indicate inefficient use of working capital.

What is EBITDA and why is it widely used?

Earnings Before Interest, Taxes, Depreciation, and Amortization. It approximates operating cash flow by removing non-cash and financing-related items. Used for valuation multiples (EV/EBITDA) and for comparing companies with different capital structures. Critics note it can obscure significant cash expenses.