Ratio Analysis
Margins, returns, liquidity, the working-capital cycle and leverage — computed from your figures, then read for what they imply.
Run a Ratio Analysis
Every figure is calculated from your inputs, not generated. Free, no sign-up.
EBITDA less D&A. Enables the EBIT margin.
Name the decision you are trying to make and we will prioritise the interpretation.
- Analysis (completed)
- Context (completed)
- Inputs
- Review
- Generate
- Result
- Export
What this tool does
Ratio analysis turns a set of financials into a diagnosis. Margin tells you whether the business is worth scaling at all. Return on equity and return on assets tell you whether capital is being used well against alternatives. The cash conversion cycle — days sales outstanding plus days inventory outstanding minus days payables outstanding — tells you whether growth is self-funding or whether every new customer consumes cash before it produces any. Liquidity and leverage ratios then say how much room you have before the position becomes a problem. Every ratio here is computed from your figures in Python, and any ratio whose denominator is zero is left blank rather than shown as a misleading number. Threshold warnings are generated by the calculator, not the model, so they cannot be softened.
How to use it
- 1Enter revenue, cost of goods sold and EBITDA from the same period. Mixed periods produce ratios that mean nothing.
- 2Add EBIT if you have it — EBITDA alone cannot give you an EBIT margin or an interest-coverage ratio.
- 3Enter the balance-sheet lines: assets, equity, current assets and liabilities, inventory, receivables, payables, debt and cash.
- 4Read the warnings first. They are computed alongside the ratios and name the specific thresholds that are breached.
A worked example
What a real run looks like
Input — a mid-sized operator, not a generic prompt
Revenue 50m, COGS 30m, EBITDA 8m, EBIT 6.5m, interest 0.9m, assets 38m, equity 19m, current assets 16m, current liabilities 11m, inventory 4m, receivables 6m, payables 5m, debt 12m, cash 3m.
What comes back
Gross margin 40%, EBITDA margin 16%, ROE 42.1%, ROA 21.1%. Current ratio 1.45 and quick ratio 1.09, so liquidity is adequate but not generous. Net debt 9m, or 1.12x EBITDA, comfortably under the 3x lenders treat as constrained. The working-capital cycle runs 31.6 days — 43.8 days sales outstanding, 48.7 days inventory, 60.8 days payables — meaning growth here is close to self-funding. The interpretation answers the question you asked rather than restating the ratios.
Frequently asked questions
Which financial ratios matter most?
Margin tells you whether the business is worth scaling, return on equity tells you whether capital is being used well, and the cash conversion cycle tells you whether growth is self-funding. Liquidity and leverage then tell you how much room you have before the position becomes a problem.
What is the cash conversion cycle?
It is the number of days between paying for inventory or services and collecting the cash that results: days sales outstanding plus days inventory outstanding, minus days payables outstanding. A long cycle means growth consumes cash even when it is profitable.
What is a healthy net debt to EBITDA ratio?
Below 3x is generally comfortable; above 4x tends to be treated as constrained by lenders. It matters because it measures how many years of current earnings would be needed to clear the debt.
Are these ratios calculated or generated?
Calculated. The arithmetic runs in Python on our servers and is pinned by automated tests. Where a ratio has a zero denominator it is left blank rather than shown as a misleading number, and any threshold breach is flagged by the calculator itself rather than by the model.
Is this ratio analysis tool free?
Yes. The ConsultantAI ratio analysis tool is free and requires no sign-up.
Need this on your own engagement?
The free tool covers the framework. A full ConsultantAI project turns it into a cited, board-ready deliverable built from your documents — market sizing, a financial model, or a complete deck, with every figure sourced.