Ratio Analysis

Ratios used in financial analysis compare companies to or within an industry. We have listed groups of commonly used ratios with links to examples, explanations, and formulas. Continue reading

Study Sheet of Debt Management Ratios

Learn about Debt Ratio, Debt to Equity Ratio, EBITDA Coverage Ratio, Equity Multiplier, and TIE Ratio with this printable Smartacus Study Sheet. Continue reading

TIE Ratio

The TIE Ratio shows the ability to pay interest charges out of earnings. (TIE stands for times interest earned.) This interactive tutorial walks you through the calculations, including where to find the numbers on the financial statements. Continue reading

Equity Multiplier

The equity multiplier ratio is the factor by which assets grew from the use of debt. This interactive tutorial walks you through the calculations, including where to find the numbers on the financial statements. Continue reading

EBITDA Coverage

The EBITDA coverage ratio shows if earnings are able to satisfy all financial obligations including leases and principal payments. (EBITDA is short for earnings before interest, taxes, depreciation, and amortization.) This interactive tutorial walks you through the calculations, including where to find the numbers on the financial statements. Continue reading

Debt to Equity Ratio

The debt to equity ratio indicates how much of a company’s financing is provided through debt as compared to equity. This interactive tutorial walks you through the calculations, including where Total Assets and Total Liabilities are on the Balance Sheet. Continue reading

Debt Ratio

The debt ratio indicates how much of a company’s assets are provided through debt. This is the proportion of funding that is provided by creditors. This interactive tutorial walks you through the calculations, including where Total Assets and Total Liabilities are on the Balance Sheet. Continue reading

Profitability Ratios Cramlet Series Review

Most of us (with the exception of majors and those who love to work with numbers) won’t take Finance unless we have to. We reluctantly wade through the classes hoping that the number junkies understand it all, and praying that Continue reading

Ratio Analysis: Concept and Limitations

Dear Professor Cram: Can you explain to me the concept of ratio analysis and the limitations of ratio analysis? Thanks! Ken S., Hong Kong Thanks for your question, Ken. In Finance, ratio analysis is generally used to compare the performance Continue reading