As an entrepreneur sometimes you are required to be everything in your business especially when starting out. Financial management is always a challenge when working without an accountant. Ratio analysis is a tool that allow you to trend in your performance as well as compare how you are doing financially compared to others in your industry.

Here are 15 Financial Ratios that you can use to manage your business when starting up

Profitability Ratios

Gross Profit/Sales = Gross Profit Margin

Operating Profit/Sales = Operating Profit margin

Net Profit/ Sales = Net Profit Margin

Net profit/ Owner’s Equity = Return on Equity

Net Profit/Total Asset = Return on Assets

Liquidity Ratios

Current Assets/Current Liabilities = Current Ratio

(Current Asset- Inventory)/ Current Liabilities = Quick Ratio

Working Capital/Sales = Working Capital Ratio

Activity Ratios

(Account Receivables*365)/ Sales = Account Receivables Days

(Inventory*365)/Cost of Goods Sold = Inventory Days

(Accounts Payable*365)/Purchases = Account Payable Days

Sales/Total Asset = Sales to asset

Leverage Ratio

Total Liability/Owner’s Equity = Debt to Equity

Total Liabilities/Total Asset = Debt Ratio

(Net Income+depreciation)/Current Maturities of |Long Term Debt = Debt Coverage Ratio