IBISWorld offers 70 data points across the data set – you’ll find the most widely used liquidity, coverage, leverage and operating ratios.
What are financial ratios?
Financial ratios are comparative measures – usually expressed as a percentage – used to assess the financial health of a company. Financial ratios convert financial information to a standardized format to make comparison easier. They’re used across many different industries, including accounting, business valuation, banking, procurement and consulting.
Which financial ratios does IBISWorld offer?
We offer the most widely used liquidity, coverage, leverage and operating ratios. You’ll also find EBITDA, income sheet and balance sheet benchmarks, and other key data points in our Industry Reports in the Financial Benchmarks chapter.
Why are the Financial Ratios figures different from Cost Structure Benchmarks?
In some cases, the comparable figures displayed in the Financial Ratios and Cost Structure Benchmarks sections can differ. Comparable figures that appear across both sections include EBIT, wages and depreciation.
Three key differences explain why the two comparable measures within one industry report can differ: the source, the intended use of each item and the unit of measure. Each of these is outlined in the table below to highlight why they differ from the source and how you can use each figure to inform your client's analysis, depending on the nature of their project/research.
| Source | Intended use | Unit of measure |
Financial Ratios | IRS Statistics, which measures corporate tax returns | Comparing financial statements of representative companies within and across industries | Enterprises (i.e., the entire company) |
Cost Structure Benchmarks | US Census (different estimation methods from the IRS), IBISWorld modelling | Assess whole industry performance and analyze trends across an industry | Establishments (i.e., one physical location) |
Full list of available financial ratios with definitions
Ratio | Definition |
Industry Multiples |
|
EBIT | A company’s revenue minus cost of goods and the regular selling, general, and administrative costs of running a business (not including interest and taxes) |
EBITDA | Similar to EBIT, but adds back in amortization and depreciation |
Leverage Ratio | Debt divided by EBITDA |
Industry Tax Structure |
|
Taxes Paid/Revenue | Taxes reported on returns divided by total revenue |
Income Statement |
|
Total Revenue | The sum of all receipts in addition to business receipts |
Business Receipts | Gross operating receipts |
Cost of Goods | Cost to the company incurred in producing goods or providing services |
Gross Profit | Revenue minus cost of goods sold |
Expenses |
|
Salaries and Wages | Salaries and wages paid including bonuses and other wages |
Advertising | Itemized advertising expenses, including parts of cost of goods sold and general advertising costs, but excluding costs for the production of advertising services |
Depreciation | Measure of the reduction in the value of tangible assets that lose value as they are used to produce income |
Depletion | Account for the exhaustion of natural resources |
Amortization | Measure of the reduction in the value of long-lived intangible assets |
Rent Paid | Rents paid for the use of land, property or equipment |
Repairs | Expense for the cost of maintenance and incidental repairs |
Bad Debts | Bad debts incurred during the period |
Employee Benefit Programs | Value of employer contributions to employee benefit plans |
Compensation of Officers | Payments of all kinds to officers |
Taxes Paid | Taxes reported on returns |
Interest Income | Taxable interest included in total receipts |
Other Income |
|
Royalties | Income earned from payments made to the company by ongoing users of their intellectual property, such as copyrights, patents and trademarks |
Rent Income | Income earned from rental properties |
Net Income | The net profit or loss from all sources of income |
Balance Sheet |
|
Assets |
|
Cash and Equivalents | Amount of money or similar short-term instruments |
Notes and Accounts Receivable | Gross amount of sales or services to customers on credit |
Allowance for Bad Debts | Account for reserves to cover doubtful notes or uncollectable loans |
Inventories | Year-end inventories on the balance sheet |
Property, Plant and Equipment | Tangible assets (also called fixed assets) that usually have a life exceeding one year |
Accumulated Depreciation | Contra asset for the cumulative depreciation of tangible assets |
Intangible Assets | The balance sheet value of goodwill, patents, registered trademarks and similar assets that were amortizable |
Accumulated Amortization | Contra asset for the cumulative amortization of intangible assets |
Total Assets |
|
Accounts Payable | Short-term liabilities from trade or business operations |
Liabilities and Net Worth |
|
Notes Less Than 1 yr | Mortgages, notes and bonds payable in less than one year |
Other Current Liabilities | Other short-term obligations, such as dividends and other financial obligations (e.g., short-term loans) due within one year |
Loans From Shareholders | Long duration loans to the company from shareholders |
Notes More Than 1 yr | Mortgages, notes and bonds payable in more than one year |
Other Liabilities |
|
Capital Stock | Year-end value of outstanding shares |
Additional Paid-In Capital | Additions to capital not made from earnings |
Retained Earnings, Appropriated | Earnings set aside for a specific purpose |
Retained Earnings, Unappropriated | Retained earnings less reserves used for dividends and distributions |
Cost of Treasury Stock | Value of reacquired stock held at year-end |
Net Worth | Ownership’s equity in the business (total assets minus liabilities) |
Liquidity Ratios |
|
Current Ratio | Total Current Assets divided by Total Current Liabilities |
Quick Ratio | Add cash and equivalents to trade receivables. Then, divide by total current liabilities. |
Sales/Receivables | Net sales divided by trade receivables |
Days Receivables | The sales/receivables ratio divided by 365 |
Days Inventory | Cost of sales/inventory ratio divided by 365 |
Inventory Turnover | Cost of goods divided by inventory |
Payables Turnover | Cost of goods divided by accounts payable |
Days Payables | Cost of sales/payables ratio divided by 365 |
Sales/Working Capital | Net sales divided by net working capital |
Coverage Ratios |
|
Interest Coverage | EBIT divided by interest expense |
Debt Service Coverage Ratio | EBITDA divided by current debt obligation |
Leverage Ratios |
|
Fixed Assets/Net Worth | Fixed assets divided by net worth |
Debt/Net Worth | Total liabilities divided by tangible net worth |
Operating Ratios |
|
Return on Net Worth | EBIT divided by net worth |
Return on Assets | EBIT divided by total assets |
Sales/Total Assets | Sales divided by total assets |
EBIT/Revenue | Earnings Before Interest and Taxes divided by total revenue |
EBITDA/Revenue | Earnings Before Interest, Taxes, Depreciation and Amortization divided by total revenue |
Cash Flow and Debt Service Ratios (% of sales) |
|
Cash From Trading | Cash based production costs subtracted from cash from sales |
Cash After Operations | Cash operating costs subtracted from cash from trading |
Net Cash After Operations | Funds from operations and changes in working capital |
Debt Service P&I Coverage | Net cash after operations divided by the sum of current debt obligations |
Interest Coverage (Operating Cash) | Net cash after operations divided by cash and noncash interest expenses |
For additional questions regarding US Financial Ratios, please contact your Client Relationship Manager. If you don’t have an IBISWorld account, please contact us to learn more about our membership options.