The waist-to-hip ratio is a measure of the relationship between waist and hip circumference, with a ratio of 0.7 for women and 0.9 for men indicating better health and fertility. It is also linked to attractiveness and may be a better predictor of health risks than body mass index. People with an “apple” shape are […]
Blood pressure readings, including the systolic-diastolic ratio, provide important information for doctors to diagnose potential heart, kidney, or circulatory system problems. Abnormally low readings may indicate internal bleeding or inflammatory diseases. Doctors also consider a patient’s age and other symptoms when making a diagnosis. In most doctor’s offices, a patient’s vital signs will be taken […]
Poisson’s ratio measures how stretching or compressing an object in one direction affects its contraction or expansion in other directions. It varies and can even be negative. It is used in different fields of science and has important uses in geology. Poisson’s ratio concerns how stretching or compressing an object in one direction causes it […]
Mortgage lenders use the mortgage debt ratio to assess a borrower’s ability to make monthly mortgage payments. The ratio is calculated by dividing the borrower’s monthly income by the projected monthly mortgage payment. Lenders also consider other debts before approving a mortgage. A front-end ratio of 30% or less is generally required, while a regression […]
Debt-to-income ratio compares income generated in a specific period with debt that must be paid during the same period. It helps determine the amount of additional debt that can be taken on without creating financial hardship. Lenders set a percentage range for the ratio, with a ratio greater than 50% resulting in loan rejection. The […]
Bank ratio analysis uses mathematical formulas to evaluate a bank’s financial statements, including liquidity, asset turnover, and leverage ratios. Liquidity ratios, such as the current and cash ratios, assess a bank’s ability to pay liabilities. Asset turnover ratios measure bank efficiency, while leverage ratios evaluate debt usage. Investors can use ratio analysis to determine whether […]
The recruitment ratio is used by HR professionals to make better hiring choices. A low ratio allows for selectivity, but may result in rejecting qualified candidates. Accurate testing methods combined with a low ratio can lead to a high success rate for new employees. The recruitment ratio is a concept used by corporate HR professionals […]
The cost-performance ratio is a tool used to balance the cost of an item with its effectiveness. It can help shoppers make purchasing decisions and analyze production trends. There are four possible outcomes, and a four-quadrant chart can be used to plot results. However, other factors may be important, and the ratio can fluctuate for […]
The cash conversion ratio helps businesses understand if revenue generated from production is sufficient to cover expenses. It is calculated by dividing cash flow from sales by production costs and earnings before taxes. A high ratio indicates profitability, while a low ratio may require changes to reduce waste and increase sales. Investors can also use […]
Ratio analysis is important for assessing a business’s health, evaluating its performance, comparing it to other companies, and attracting potential investors or lenders. It provides valuable financial information and helps make informed decisions. The importance of ratio analysis stems from its usefulness as a tool for assessing the health of a business by owners, potential […]
Operating expense ratio (OER) is a financial calculation that measures the cost of managing an investment as a percentage of its income or net worth. It is used to assess management efficiency in keeping expenses low and maximizing profitability. OER is calculated differently depending on the type of investment, and it is commonly used in […]
China has a chicken-to-person ratio of 3:1, with 4.5 billion chickens for 1.5 billion people. Brunei has the highest ratio at 40 chickens per person. China also has the largest number of pigs and sheep, while Brazil and India have the most livestock. New Zealand has the highest sheep-to-person ratio. The chicken-to-person ratio in China […]
The current ratio includes inventory while the quick ratio does not. Both ratios can be used to determine a company’s liquidity, but the choice depends on the company and its inventory value. Tracking both ratios can help determine if inventory is holding at a beneficial level. The difference between the current ratio and the quick […]
The Cash Coverage Ratio formula determines if a business has enough funds to pay interest and operating costs. The ratio takes EBIT, non-cash expenses, and interest expense to show how much money a company has compared to its debt. A ratio greater than 1 is best, while less than 1 indicates bankruptcy. The Cash Coverage […]
The price-to-sales ratio (PSR) compares a company’s market capitalization to its revenue for the past 12 months, providing an indicator of whether a stock is overvalued or undervalued. It can be useful for new companies or those with cyclical fluctuations or unusual expenses. Comparing PSRs between companies in the same industry is important, and other […]
The long-term debt ratio measures a company’s debt compared to its assets or equity, indicating its financial health and risk in a downturn. There are two interpretations, comparing debt to assets or shareholder equity. Credit lines can limit its utility, and long-term creditors are more interested in it than short-term creditors. The long-term debt ratio […]
Ratio analysis is a method of analyzing a company’s financial strength by calculating ratios from its balance sheets and income statements. These ratios are useful only in comparison to other ratios, and the type of analysis used depends on the purpose of the analysis. Balance sheet ratios determine creditworthiness, while income statement ratios determine profitability. […]
Leverage ratios compare a company’s debt, equity, assets, and interest payments to assess its long-term solvency. The debt ratio, debt-to-asset ratio, and interest coverage ratio are commonly used formulas. Acceptable ratios are determined by industry standards and tracking a company’s ratio over time. Highly leveraged companies are considered risky and vulnerable to economic downturns. A […]
The capital intensity ratio measures how much a company invests in total assets compared to its revenue. It is calculated by dividing the value of total assets by income earned over a period. A high ratio indicates a company needs to spend more to generate revenue and may struggle to stay afloat. Comparisons should be […]
Equity ratio measures a company’s leverage by comparing its liabilities to shareholders’ equity. A high debt to equity ratio indicates more debt financing, while a high equity ratio doesn’t necessarily mean low earnings. Industry type can also affect the ratio. An equity ratio is a financial calculation or ratio that determines the amount of leverage […]
