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Topic
Ratios
35 guides in Finabase Learn
- Current Ratio Current assets divided by current liabilities; a basic test of whether a company can cover its short-term obligations.
- Current ratio and quick ratio: measuring short-term liquidity How to calculate the current, quick and cash ratios, what each leaves out, and why Apple’s current ratio below 1 is no warning sign while elsewhere it can be.
- Debt-to-Equity Ratio Total debt (or total liabilities) divided by shareholders' equity; a measure of how much a company relies on borrowing.
- Debt-to-equity ratio: formula, versions and when it misleads How to calculate the debt-to-equity ratio, why versions differ, and why Apple’s 1.34 D/E hides a net cash position, with net debt, debt/EBITDA and its note maturities.
- Dividend Payout Ratio The share of a company's earnings paid out as dividends; a ratio above 100% means it pays more than it earns.
- Dividend payout ratio: formula, examples and sustainability Calculate the dividend payout ratio on earnings and on free cash flow, add buybacks for total payout, and judge whether a dividend is sustainable, with Apple’s numbers.
- Dividend Yield A stock's annual dividends per share divided by its share price, expressed as a percentage.
- Earnings Per Share (EPS) Net income available to common shareholders divided by the weighted average number of shares outstanding.
- Enterprise value (EV): formula, what counts as debt and cash Build enterprise value from market cap, debt and cash on Apple’s fiscal 2025 balance sheet, decide which cash to subtract, and see why EV is the takeover price.
- EV/EBITDA Enterprise value divided by EBITDA, a valuation multiple that compares companies regardless of how they are financed.
- EV/EBITDA: the capital-structure-neutral valuation multiple Calculate EV/EBITDA and EV/EBIT on Apple’s fiscal 2025 numbers, see why debt doesn’t distort it the way it distorts P/E, and learn where EBITDA misleads.
- EV/Sales ratio: enterprise value to revenue, explained Work out EV/Sales for Apple and its peers, see why it differs from P/S, adjust it for gross margin, and learn when a revenue multiple is the right tool.
- Forward P/E Share price divided by analysts' expected earnings per share for the next 12 months or fiscal year.
- Forward P/E ratio: valuing a stock on expected earnings How forward P/E is built from analyst estimates, NTM versus next-fiscal-year EPS, how far estimates can miss, and what Apple’s 29.3-to-42.0 range teaches.
- Free cash flow yield: formula, benchmarks and shareholder yield Compute free cash flow yield and P/FCF on Apple’s fiscal 2025 numbers, compare it with earnings yield and bond yields, and see how buybacks and dividends add up.
- Gross margin Gross profit divided by revenue: the share of each sales dollar left after paying the direct costs of what was sold.
- Interest coverage ratio Operating profit (EBIT) divided by interest expense; how many times over a company can pay the interest on its debt.
- Interest coverage ratio: can earnings pay the interest bill? How to calculate interest coverage from EBIT or EBITDA, how lenders use coverage covenants, and Apple’s 29.1× in fiscal 2023, its last disclosed year.
- Net profit margin Net income divided by revenue: the share of each sales dollar that ends up as profit after all costs.
- Operating margin Operating income divided by revenue: what share of sales remains after the costs of running the business, before interest and tax.
- PEG ratio The P/E ratio divided by the expected annual earnings growth rate, used to compare valuations across companies growing at different speeds.
- Price-to-book ratio (P/B) Market price divided by book value per share, comparing what investors pay with the accounting net worth of a company.
- Price-to-book ratio (P/B): book value, buybacks and ROE How to calculate price-to-book, why Apple’s buybacks push it above 50, when tangible book matters, and where P/B works (banks) and fails (asset-light tech).
- Price-to-earnings ratio (P/E) Share price divided by earnings per share: how many dollars investors pay for each dollar of a company’s annual profit.
- Price-to-earnings ratio (P/E): formula, examples and limits Calculate a P/E ratio and earnings yield from real numbers, see why Apple’s trailing P/E jumps on report days, and learn when the ratio misleads.
- Price-to-sales ratio (P/S) Market capitalization divided by annual revenue: what investors pay per dollar of sales, often used for companies without profits.
- Price-to-sales ratio (P/S): formula, examples and how to read it Calculate the price-to-sales ratio two ways, see why it works for unprofitable companies, link it to margins and P/E, and compare Apple with its peers.
- Profit margins: gross, operating and net margin explained How to calculate gross, operating and net margin, read them as a ladder of costs, and spot mix effects and one-time charges, using Apple’s fiscal 2023–2025 results.
- Quick ratio Cash, marketable securities and receivables divided by current liabilities: a strict test of short-term liquidity that leaves out inventory.
- Return on assets (ROA) Net income divided by total assets: how much profit a company generates from everything it owns, regardless of how it is financed.
- Return on assets (ROA): how to calculate and compare it Calculate return on assets, link it to margin and asset turnover, see why banks and tech firms differ, and compare Apple’s 30.9% ROA with its ROE and ROIC.
- Return on equity (ROE) Net income divided by shareholders’ equity: the profit a company earns on the money its owners have invested and left in the business.
- Return on equity (ROE): formula, DuPont analysis and pitfalls How to calculate return on equity on average or ending equity, split it with DuPont analysis, and see why Apple’s 171% ROE says more about buybacks than profit.
- Return on invested capital (ROIC) After-tax operating profit divided by the debt and equity invested in operations: a measure of returns that is neutral to financing.
- Return on invested capital (ROIC): NOPAT, capital and WACC How to compute ROIC from NOPAT and invested capital, why Apple’s figure ranges from 65% to 281% by definition, and how ROIC versus WACC tests value creation.
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