![]() ![]() ![]() Similarly, current liabilities are debt obligations due within one operating cycle. Remember, current assets are cash or assets which can be converted to cash in one operating cycle (usually one year). (Or, put another way: it indicates your ability to pay your bills on time!) The current ratio measures how well you can cover current liabilities with liquid assets. In this example, there are $3.03 of creditors’ funds for every $1 of owners’ funds invested in the business.Ĭurrent ratio is an indicator of solvency, or the ability to meet your current debt obligations. Total Liabilities divided by Net Worth = Debt-to-Worth Use the amounts listed on your balance sheet. To calculate debt-to-worth, divide your total liabilities by your net worth (equity). So, debt-to-worth is a measure of the safety of your business. In other words, the higher the ratio the riskier the business. The more a company is supported by debt, the riskier it is considered. It compares the amount invested in your business by creditors to that invested by the owners. The debt-to-worth ratio is the #1 measure of the financial strength of a business. Based on the Middle Quartiles results, The ROI calculates GMROI for each segment, and then prepares our Five Year Trend Charts for each of the 6 Key Ratios for each segment. RMA presents their data in 3 sections: the Top Quartile, the Middle Quartiles, the Bottom Quartile. RMA collects financial statements from banks, and aggregates the findings for all industries, not just retailing. Just click its name to go to its own page.Īs is noted on each Benchmarks page, the source data is Risk Management Association's Annual Statement Studies. In addition, The ROI presents key financial ratios for four major restaurant types. The ROI has charted and graphed the Five-Year Trends of these six key ratio performance metrics for independent retailers. Everything on The ROI site teaches to these 6 key ratios. We focus on these because they represent "controllable variables" for retailers. On these 55 Segment Pages, The ROI presents the 6 key ratios we have selected as particularly important for retailers to monitor. The ROI publishes key financial performance benchmark data in exclusive Five-Year Trend Charts for 55 separate retail segments , from hardware stores to bookstores, clothing stores, gift shops, wine stores, music stores, furniture stores, tire dealers, and more. ![]()
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