Current Assets less Inventory divided by Current Liabilities

This is a measure of a firm's ability to meet short-term obligations without relying on sale of inventory. A ratio of less than one may indicate a potential cash shortage.

This is a general indication of the extent to which claims of short-term creditors are covered by assets that are expected to be converted into cash in a period that roughly corresponds to the due dates of the current liabilities. The higher the ratio, the greater the cushion between current obligations and the ability to pay them. A general guideline suggests that a current ratio less than 2 might indicate a potential cash shortage.

This ratio expresses the relationship between capital contributed by current obligation creditors and capital contributed by owners. It indicates the ability of a firm to safely meet the obligations of current creditors. The higher the percentage, the greater the risk a firm will not be able to meet the obligations of creditors and a low percentage may be an indication of potential cash shortage problems.

This ratio provides an indication of the ability of the inventory sales to generate the cash needed to meet the short-term obligation of creditors. A ratio that is low usually indicates that a firm will be able to meet short-term obligations and a high ratio may be cause for concern and signal a potential cash shortage.

This expresses the relationship between the capital contributed by creditors and the capital contributed to a firm by owners. This provides an indication of the ability of a firm to meet creditor obligations. The lower the ratio, the better financial condition the firm is thought to be in. A high ratio may signal a potential cash shortage and a low ratio firm usually has greater ability to borrow debt in the future.

This ratio provides the percentage of assets centered in fixed assets compared to total equity. Generally, the higher this percentage, the more vulnerable a firm becomes to unexpected hazards and business climate changes. Capital is frozen in the form of machinery and the margin for operating funds becomes too narrow to support day-to-day operations.

This ratio measures how efficiently working capital is being used. A low ratio may indicate inefficient use of working capital, while a high ratio may signal potential cash shortages and the risk of not being able to pay creditors.

This ratio provides a measure of a firm’s ability to generate sales revenue to cover supplier expenses. A low percentage may indicate an over reliance on supplier credit to support sales.

This ratio shows the percentage profit earned on sales by a firm and it is important to compare a firm’s performance with that of similar size firms in the same industry. This ratio should increase as the volume of sales grows because fixed costs are spread over more units of sales.

This ratio measures the return on the total investment in assets including those financed with debt as well as equity. This is an important measure that should be compared with similar size firms in the industry.

This ratio is a measure of the return or earnings on the money invested in a firm. This return must be high enough to provide owners with an adequate return for the risk that is being assumed by keeping investments in the firm. A low return will also make it difficult to attract additional investment capital in the future. This measure is best compared to similar size firms in the same industry.

This is a measure of the productivity of employees and can give a firm an indication of appropriate staffing levels when compared to similar firms in the same industry. In addition, this is a measure of how capital or labor intensive a firm is. A low measure may indicate that a firm is labor intensive (or over-staffed) and a high measure may indicate a firm is capital intensive (or under-staffed). The management of labor resources is important to the success of a business and this is an important measure to compare with other firms in an industry.

This ratio measures how easily a company can pay interest on outstanding debt. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses.