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
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Activity Ratios
Accounting ratios that measure a firm's ability to convert different ... 
Combined Ratio
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Efficiency Ratio
Ratios that are typically used to analyze how well a company ... 
Cash Ratio
The ratio of a company's total cash and cash equivalents to its ... 
Profitability Ratios
A class of financial metrics that are used to assess a business's ...

Investing
Ratio Analysis
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Investing Basics
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Make informed decisions about your investments with these easy equations. 
Fundamental Analysis
Efficiency Ratio
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Stock Analysis
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Stock Analysis
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Stock Analysis
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Fundamental Analysis
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Trading Strategies
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Stock Analysis
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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 >> 
Why do shareholders need financial statements?
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Which financial metrics are best for analyzing companies in the chemicals sector?
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How does ratio analysis make it easier to compare different companies?
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