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Financial Analysis & Ratios
Reading the business scoreboard - numbers tell stories
22 TopicsIntermediate to AdvancedIncludes Calculators
Ratio Analysis Fundamentals
Understanding what ratios tell us about business health
Liquidity Ratios
Can the company pay its short-term obligations?
Solvency Ratios
Can the company survive long-term?
Profitability Ratios
Is the company making money efficiently?
Efficiency Ratios
How well does the company use its resources?
Advanced Analysis
Deeper insights and investor metrics
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Practice Financial Statement Analysis
Build and analyze financial statements with interactive exercises in our Learning Lab.
Try It in the Learning Lab→Frequently Asked Questions
A current ratio of 1.5 to 2.0 is generally considered healthy, but it varies by industry. Above 1.0 means the company can cover short-term obligations. Too high (above 3.0) might mean excess idle assets. Compare to industry peers for context.
ROA (Return on Assets) measures how efficiently a company uses ALL its assets to generate profit. ROE (Return on Equity) measures returns specifically to shareholders. The difference comes from leverage - a company with more debt will have higher ROE relative to ROA.
DuPont analysis breaks ROE into three components: Profit Margin × Asset Turnover × Equity Multiplier. This shows whether high ROE comes from good margins, efficient asset use, or financial leverage - helping identify what's actually driving performance.