Financial Ratios
Financial ratios are standardised calculations from a company's financial statements that make profitability, efficiency, leverage and valuation comparable across companies and years.
Margins, return ratios, leverage, working-capital and valuation multiples, each with the formula, what it really tells you, and the situations where it misleads.
What you will be able to do
- Compute and interpret the ratios analysts use daily
- Compare two companies fairly using common-size data
- Know when a ratio is being distorted by accounting choices
Lessons
Work through these in order.
Careers that use this
Roles where this knowledge is used daily.
Key terms
Frequently asked questions
Which financial ratio matters most?
There is no single best ratio. Return on capital employed shows how productively capital is used, debt to equity shows balance-sheet risk, and valuation multiples show what you are paying. They only mean something together and in context of the sector.
Other learning hubs
VIA Capital publishes financial education only. Nothing on this page is investment advice, a stock recommendation, or a personalised financial plan.