Financial Ratios

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Financial Ratios Analysis Calculator

Sr.NoFINANCIAL RATIOS ANALYSISParticularsAmountActualRange

1) BASIC LIQUIDITY RATIO

Cash / Liquid Assets
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Monthly Expenses
This ratio indicates one's ability to meet mandatory monthly expenses & other emergency needs
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< 3 Adverse
3- <5 Moderate
3- <5 Moderate
> 6 Less Optimum

2) EXPANDED LIQUIDITY RATIO

Liquid Assets
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Net Worth
This ratio is required during emergency situations when it may not be possible to convert one's assets into cash
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< 10% Adverse
10% - 15% Moderate
> 15% - Optimum

3) SAVINGS RATIO

Savings
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Gross Inflow
This ratio calculates the proportion of income an individual sets aside for savings out of the total income
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< 10% Adverse
10% - 25% Moderate
> 25% - Optimum

4) DEBT ASSET RATIO

Total Liabilities
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Total Assets
This ratio calculates an individual's ability to pay liabilities out of assets.
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< 30% - Optimum
30% - 50% - Moderate
> 50% - Adverse

5) SOLVENCY RATIO

Net Worth
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Total Assets
This ratio is used to measure the potential of long-term solvency
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< 30% - Adverse
30% - 50% - Moderate
> 50% - Optimum

6) DEBT SERVICE RATIO

A)Annual Debt Payments
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Annual Take-Home
These ratios are used to measure an individual's ability to make debt repayments out of Net Take Home
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< 25% - Optimum
25% - 45% - Moderate
>45% - Adverse
B)Non-Mortgage Debt
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Annual Take-Home

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< 7% - Optimum
7% - 15% - Moderate
>15% - Adverse

7) FINANCIAL INVESTMENT RATIO

Invested Assets
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Net Worth
This ratio is used to determine an individual's invested assets (excluding self consumption) out of total Net Worth
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< 30% - Adverse
30% - 50% - Moderate
>50% - Optimum

Notes:

  1. Basic Liquidity Ratio - Cash / Liquid assets Will include only cash, liquid funds, savings & flexi accounts
  2. Expanded Liquidity Ratio - Will include assets such as MFs, Direct Equity, etc besides the liquid assets
  3. Savings Ratio - Only regular / systematic savings to be included. Gross inflow to include all inflows
  4. Debt Service Ratio - Annual Take Home will be calculated as Gross Income minus taxes & Contributions & Deductions from Salalry, etc

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