by Ekrem Duman | Jun 1, 2026 | KPIs & Metrics, Liquidity & Solvency
⚡ TL;DRThe quick ratio — or acid-test ratio — measures liquidity using only the most liquid assets, excluding inventory. Quick ratio = (current assets − inventory) ÷ current liabilities. A ratio of 1.0 means a company can cover every dollar of short-term debt without...
by Ekrem Duman | Jun 1, 2026 | KPIs & Metrics, Liquidity & Solvency
⚡ TL;DRThe current ratio measures short-term liquidity: current assets divided by current liabilities. A ratio of 2.0 means a company has $2 of short-term assets for every $1 of short-term debt. It answers whether a business can pay its bills over the next year. Too...
by Ekrem Duman | May 31, 2026 | KPIs & Metrics, Profitability Metrics
⚡ TL;DREBITDA margin is earnings before interest, taxes, depreciation, and amortization, divided by revenue. It strips out financing, tax, and non-cash accounting choices to show core operating cash profitability. EBITDA margin = EBITDA ÷ revenue. It is the favourite...
by Ekrem Duman | May 31, 2026 | KPIs & Metrics, Profitability Metrics
⚡ TL;DRReturn on invested capital (ROIC) measures the after-tax operating profit a company earns on all the capital — debt and equity — invested in the business. ROIC = NOPAT ÷ invested capital. When ROIC exceeds the weighted average cost of capital (WACC), the...
by Ekrem Duman | May 31, 2026 | KPIs & Metrics, Profitability Metrics
⚡ TL;DRReturn on equity (ROE) measures profit generated per dollar of shareholder equity; return on assets (ROA) measures profit per dollar of total assets. ROE = net income ÷ equity; ROA = net income ÷ total assets. Together they reveal how efficiently a company...
by Ekrem Duman | May 31, 2026 | KPIs & Metrics, Profitability Metrics
⚡ TL;DRGross, operating, and net margin measure profitability at three depths. Gross margin = (revenue − COGS) ÷ revenue and shows production efficiency. Operating margin subtracts overhead and reveals core business profitability. Net margin subtracts interest and...
