Key Financial Ratios

Key Financial Ratios diagram. This is one of the top business frameworks helping clients improve on their approach to strategy, project management, IT, HR, internal processes and client experience.

This key financial ratio shows whether a company has enough income to cover its debts and is often used to evaluate a company’s credit risk and debt capacity. Debt service coverage ratio is calculated by dividing net operating income by total debt service (i.e. the sum of its debt obligations, including lease payments).

Commonly used ratios in this classification include: Gross margin ratio. The formula is the gross margin, divided by sales. It is useful for evaluating the total profitability of a company’s products and services. Operating income ratio.

Financial Ratios are key indicators of the financial performance of the company and are usually derived from its three statements including income statement, balance sheet, and cash flows. These financial ratios help in analyzing the company’s profitability, liquidity, assumed risks as well as financial stability.

Key Financial Ratios

Key Financial Ratios