Ratio calculator

Run a small business, or do the books for one? Take the free books check or browse the free Excel templates. Want a hand? Contact us.

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Ratio examples and common mistakes

Simplify a ratio

Divide both numbers by their greatest common divisor. For 18:24 the divisor is 6, so the ratio is 3:4. A 1920 by 1080 screen has a divisor of 120, which gives the familiar 16:9.

Solve a proportion

For 3:5 = 12:?, multiply the two numbers on the diagonal and divide by the third: 5 x 12 / 3 = 20. So 12 cups of flour go with 20 cups of milk, and 12:20 is still 3:5.

Split an amount by a ratio

To share $1,000 in the ratio 2:3:5, add the parts (2 + 3 + 5 = 10), divide the amount by the total (1,000 / 10 = 100 per part) and multiply: $200, $300 and $500.

Ratio, fraction or percent?

A ratio of 3:5 compares the two parts. As shares of the whole they are 3/8 = 37.5% and 5/8 = 62.5%. As one part against the other, 3 is 60% of 5. Say which one you mean before you share a number.

Common mistakes

• Mixed units. 30 minutes to 2 hours is 30:120, which is 1:4, not 30:2. Convert to the same unit first.
• Swapped order. 3:5 and 5:3 are different. Keep the same order on both sides of a proportion.
• Decimals. To simplify 0.5:2, multiply both sides by 2 to get 1:4, then reduce if needed.

Ratios for a small business

Lenders, buyers and your own bookkeeper read a business through a handful of ratios. Each one is two numbers from your books divided by each other, so the same method applies. These examples use invented figures.

• Net profit margin. Revenue of $80,000 and total costs of $62,000 leave $18,000 of profit. $18,000 / $80,000 = 0.225, or 22.5%.
• Markup versus margin. An item that costs $60 and sells for $100 has a markup of 40 / 60 = 66.7% but a margin of 40 / 100 = 40%. They are different numbers for the same sale, so say which one you mean when you set prices.
• Current ratio. $30,000 of current assets against $20,000 of current liabilities is 30,000 / 20,000 = 1.5. You hold $1.50 for every $1 due within a year.
• Quick ratio. Leave out inventory. $8,000 cash plus $12,000 receivables against $20,000 of current liabilities is 1.0.
• Debt-to-equity. $40,000 of liabilities and $50,000 of owner equity is 40,000 / 50,000 = 0.8.

Pick the ratio you need and enter your own numbers: net profit margin, profit margin and markup, current, quick and cash ratio, debt-to-equity, debt service coverage. All of them run in your browser and send nothing.

Business ratio snapshot

Enter a few numbers from your income statement and balance sheet. Everything is worked out in your browser; nothing is sent or saved. Leave out anything you do not have.

These are general measures, not advice. What counts as healthy depends on your industry, your lender and your history. Compare with your own past figures first.

Get these numbers from real books

The snapshot is only as accurate as what you type. If you would like the figures to come from books that are up to date and reconciled, these are the next steps:

• Free bookkeeping health check — a few quick questions and a plain-English list of what to fix first.
• Free 5-part email course — how to read the income statement and balance sheet, with worked examples.
• Month-End Close Workbook — an Excel workbook with a dated checklist, a bank reconciliation that flags what does not tie, and a flux review, so your month-end numbers are ready to use.
• Financial Ratio Analysis Workbook — enter three years of statements and see about 20 ratios side by side, with a trend and a flag against your own targets.
• Loan-Readiness Workbook — the ratios a lender commonly looks at, with and without the new loan, plus a document checklist.
• Business Valuation & Forecaster — an Excel model with a five-year income statement, balance sheet and cash flow built from your assumptions, plus a discounted cash flow value.
• Bookkeeping from MCC Solutions — we keep the books and send you the numbers each month.

Buying more than one? The Business Finance Ratios Bundle includes the ratio, loan-readiness and valuation workbooks together.

Using ratios for something other than a business?

Cooking and baking are ratio work too: the Recipe Costing and Menu Pricing Workbook turns a recipe into a cost per portion and a price for your target food cost. Teachers, tutors and parents can use the printable Ratio and Proportion Worksheet Pack, which comes with a worked answer key.

Where the numbers come from

A ratio is only as good as the books behind it. If your income, expenses and balance sheet are not up to date, the result will be off. MCC Solutions LLC in Cranford, NJ does small business bookkeeping, so the figures you plug into these ratios match what is actually in your accounts.