What is the 'Accounting Ratio'
A way of expressing the relationship between one accounting result and another, which is intended to provide a useful comparison. Accounting ratios assist in measuring the efficiency and profitability of a company based on its financial reports. Accounting ratios form the basis of fundamental analysis.
Also called financial ratio.
BREAKING DOWN 'Accounting Ratio'
An accounting ratio compares two aspects of a financial statement, such as the relationship (or ratio) of current assets to current liabilities. The ratios can be used to evaluate the financial condition of a company, including the company's strengths and weaknesses. An example of an accounting ratio is the pricetoearnings (P/E) ratio of a stock. This measures the price paid per share in relation to the profit earned by the company per share in a given year.

Current Ratio
The current ratio is a liquidity ratio measuring a company's ... 
Ratio Analysis
A ratio analysis is a quantitative analysis of information contained ... 
Activity Ratios
Accounting ratios that measure a firm's ability to convert different ... 
Key Ratio
A mathematical ratio that illustrates and summarizes the current ... 
Combined Ratio
A measure of profitability used by an insurance company to indicate ... 
Operating Ratio
A ratio that shows the efficiency of a company's management by ...

Investing
Ratio Analysis
Ratio analysis is the use of quantitative analysis of financial information in a company’s financial statements. The analysis is done by comparing line items in a company’s financial ... 
Investing Basics
Analyze Investments Quickly With Ratios
Make informed decisions about your investments with these easy equations. 
Fundamental Analysis
Efficiency Ratio
There are many types of efficiency ratios, but all measure how well a company utilizes its resources to make a profit. Business managers use these ratios to determine how well they are operating ... 
Fundamental Analysis
Dynamic Current Ratio: What It Is And How To Use It
Learn why this ratio may be a good alternative to the current, cash and quick ratios. 
Trading Strategies
Financial Ratios to Spot Companies Headed for Bankruptcy
Obtain information about specific financial ratios investors should monitor to get early warnings about companies potentially headed for bankruptcy. 
Professionals
Uses and Limitations of Financial Ratios
CFA Level 1  Uses and Limitations of Financial Ratios. Discusses the limitations of financial ratio analysis. Learn how benchmarking financial ratios can increase the benefit from analysis. 
Forex Education
6. Analyze With Ratios
Learning to read the balance sheet can provide great insight into the financial strength of a company. 
Investing Basics
Do Your Investments Have ShortTerm Health?
If a company is strong enough to survive tough times, it is more likely to provide longterm value. 
Fundamental Analysis
Ratio Analysis: Using Financial Ratios
There is a lot to be said for valuing a company, it is no easy task. If you have yet to discover this goldmine, the satisfaction one gets from tearing apart a companies financial statements and ... 
Professionals
The Income Statement: Key Ratios
FINRA/NASAA Series 65  The Income Statement: Key Ratios. In this section interest coverage ratio, priceearnings ratio and price to book ratio.

How do stock dividends affect the retained earnings account?
Understand the difference between financial ratio analysis and accounting ratio analysis. Learn why ratio analysis is important ... Read Answer >> 
What is the difference between efficiency ratios and profitability ratios?
Learn about efficiency and profitability ratios, what these ratios measure and the main difference between efficiency and ... Read Answer >> 
What role does ratio analysis play in valuing a company?
Learn about the role of ratio analysis in determining company value, including some of the most common ratios used by modern ... Read Answer >> 
How do I use ratios to perform a financial analysis?
Learn which ratios are used in fundamental analysis. Find out how analysts measure company performance and financial health ... Read Answer >> 
How can a company quickly increase its liquidity ratio?
Discover what high and low values in the liquidity ratio mean and what steps companies can take to improve liquidity ratios ... Read Answer >> 
Why do shareholders need financial statements?
Discover the importance of a company's financial statements for stock shareholders in evaluating their equity investment ... Read Answer >>