StockEducation
← The advanced course

Chapter 16 · Financial Ratios

Nineteen ratios, four questions

Ratios are not a list to memorise. Each family answers one question, and you only need the ones whose question you have.

28 of 66 · 8 min

What each ratio family answers

Valuationexpensive?P/E, P/B, EV/EBITDAReturnsuses money well?ROE, ROCE, ROALiquiditycan pay bills?Current, QuickLeveragetoo much debt?D/E, Interest coverall four come from the same three statementsa ratio only means anything against a peer or its own history
Ratios are not a list to memorise. Each family answers one question, and you only need the ones whose question you actually have.

Every ratio is built from the three statements you have just read. They are not new information — they are those numbers put in proportion so they can be compared across companies of different sizes.

Saved in this browser only — there is no account to create. Clearing your browser data clears your progress.