What are financial ratios?

Ratios are a mathematical comparison of two quantities, for example, the price-earnings ratio used to analyze a stock. Ratios of one firm are often compared across time, with those of a similar company, or with all firms in the industry, i.e. an industry ratio or industry average.  

Some major forms of financial ratios are:

• profitability (e.g. earnings per share)
• liquidity / risk (e.g. current ratio, quick ratio)
• efficiency (e.g. price-to-earnings ratio)

For additional information see Financial ratios and statement analysis. (2005). In Blackwell Encyclopedia of Management (2nd ed., pp. 194-198). Malden, MA: Blackwell. Retrieved 2022, October 19, from the Gale eBooks database.

Database for finding company ratios

Databases for finding industry ratios or averages