Ratio definitions

Quick ratio

Ability to pay current liabilities from most liquid assets

Current ratio

Ability to pay current liabilities with most liquid assets

Operating margin

Assesses profitability, taking operating expenses into consideration

Gross profit margin

Profitability of product

Return on capital employed

ROI

Gearing ratio

Assess reliance on external finance

Interest cover

Ability to pay interest charges

Trade receivables collection period

How long does it take to turn receivables into cash

Trade payables payment period

How long does it take to pay suppliers

Inventory holding period

How long is inventory held for