What Are Some Financial Ratios by Industry?

What Are Some Financial Ratios by Industry?

Financial ratios by industry include debt ratios, liquidity ratios, market value ratios and profitability ratios, notes the Houston Chronicle. The ratios compare a firm's growth and its position in the industry. Ratios can be further divided into price/earnings growth, return on equity ratio and others, explains Forbes.

Debt-equity ratio measures a company's total liabilities against shareholder' equity, according to the Houston Chronicle. Lower debt ratios indicate that a company can get loans at lower interest rates. Big industries that have been in the market for a long period have higher debt-equity ratios than fast-growing industries, explains Forbes. As of 2015, the debt-equity ratio of Caterpillar and Google is 2.24 and 0.64 respectively.

Liquidity ratios determine how a company can use its liquid assets to pay off its short-term debts, states the Houston Chronicle. A company with a higher current ratio, which is current assets/current liabilities, than the industry average is able to obtain cheaper loans from lenders.

Dividend payout ratio is arrived at by dividing dividends per share with net earnings per share. Investors are likely to invest in companies that have relatively high market value ratios, including dividend yield percentage, notes the Houston Chronicle. To obtain gross profit margin percentage ratio, divide gross profit by total revenue, while to get operating profit margin percentage, divide operating profit by the revenue.

Price per earnings growth, or PEG, ratio predicts future earnings growth, notes Forbes. Apple has a PEG of 0.86, which indicates that investors may earn more in future.