# Financial Ratios

## Cash ratio

What is Cash ratio? The cash ratio or cash coverage ratio is an important liquidity ratio which is closely related to Quick Ratio and Current Ratio. Analyzing cash ratio helps in identifying the liquidity position of the company purely in terms of cash and cash equivalents. Cash ratio Meaning Cash Ratio tries to build a …

## Working capital turnover ratio

What is the Working capital turnover ratio? Among many other turnover ratios, one of the most important ratio is the Working Capital Turnover Ratio. Similar to other turnover ratios like the Asset turnover ratio or Inventory turnover ratio, this ratio helps in understanding the efficiency of the company. Working capital turnover ratio meaning Working capital turnover …

## Quick ratio formula

What is Quick ratio? As part of liquidity ratios, apart from the Current Ratio, another important ratio is the Quick ratio or Acid test ratio. Similar to the current ratio, even the Quick ratio is very easy to calculate and interpret. Since it highlights the liquidity position of any company clearly, it is one of …

## Cash conversion cycle

What is Cash conversion cycle? The cash conversion cycle is one of the most widely followed liquidity ratio. As part of Liquidity ratio analysis, similar to the Current ratio and Quick ratio, this financial metric helps in assessing the health of a company. This learning is going to be a long one since it requires …

## Gross profit margin ratio

What is Gross profit margin ratio ? The Gross profit margin ratio or simply GP margin is a profitability ratio that helps in understanding the performance of the company. It shows how much profit is the company making from its core business operations. Gross profit margin meaning Gross profit margin basically means how much profit …

## Current ratio

What is Current ratio? Understanding the current ratio formula is an important element of liquidity ratio analysis.  Liquidity ratios help us in understanding if the companies are in a better position to meet their short-term obligations. One of the most widely used and important liquidity ratio is the Current Ratio. Not only the ratio is …

## Operating Profit Margin

What is Operating Profit Margin? As part of profitability ratios, apart from the Gross Profit margin, another important ratio is the Operating Profit Margin.  These ratios help in understanding if the company is making sufficient profit from its operations. In this resource, let us understand about Operating Profit Margin in detail. Operating Profit Margin meaning …

## Inventory turnover ratio

What is Inventory turnover ratio? As part of Financial Ratio analysis, Activity ratios predominantly indicate the efficiency of the company in managing its resources. Inventory turnover ratio is one of the most important activity ratio that is more relevant in the case of manufacturing companies. Similar to other activity ratios, even this ratio indicates how …

## Payable turnover ratio

What is Payable turnover ratio ? As part of financial ratio analysis, activity ratios play an important role. These ratios help in understanding the efficiency at which the company utilizes the resources. Similarly, another important activity ratio is the Payable turnover ratio. Let us understand about this turnover ratio in-depth. Payable turnover ratio meaning As …

## Days payable outstanding

What is Days payable outstanding? The Days payable outstanding or Payable, in short, is yet another important activity ratio that helps in understanding how well the company manages its Accounts Payables. In the previous resource, we discussed the Payable turnover ratio. Similarly, even this ratio is an integral part of analyzing the overall efficiency of …