How To Calculate Financial Ratio Analysis

Financial Ratio Analysis Calculator






Financial ratio analysis is a critical tool for understanding a company’s financial health and performance. It helps investors, creditors, and management make informed decisions.

  1. Enter the relevant financial figures into the calculator.
  2. Click the ‘Calculate’ button.
  3. View and interpret the results.

We calculate the following ratios:

  • Gross Profit Margin: (Revenue – Cost of Goods Sold) / Revenue
  • Operating Profit Margin: Operating Income / Revenue
  • Return on Assets (ROA): Net Income / Assets
  • Return on Equity (ROE): Net Income / Equity
  • Debt-to-Equity Ratio: Liabilities / Equity
Average Ratios for S&P 500 Companies (2020)
Ratio Average Median
Gross Profit Margin 38.5% 39.2%
Operating Profit Margin 14.3% 14.1%
ROA 8.2% 8.1%
ROE 16.4% 15.1%
Debt-to-Equity Ratio 1.1 0.8
  • Compare ratios with industry averages to benchmark performance.
  • Track ratios over time to identify trends and make data-driven decisions.
  • Consider both the absolute value of ratios and their trend over time.
What is a good gross profit margin?

A good gross profit margin varies by industry. As a general rule, higher is better.

Financial ratio analysis in action Interpreting financial ratios

For more information, see the Investopedia guide to financial ratios and the BLS guide to understanding financial statements.

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