Finance Guide

Key Financial Ratios Every Investor Should Calculate

CalcHub Pro  ·  April 2026  ·  5 min read

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Overview

Financial ratios let you compare companies and investments on a level playing field. These five ratios cover the basics of investment analysis.

The Formula

P/E = Price per Share ÷ Earnings per Share | ROE = Net Income ÷ Shareholders Equity × 100

Standard formula used by professionals worldwide

Worked Example

Step-by-step

Company earning 10 per share, stock at 150 → P/E = 15 (average market P/E is 15-25)

Key Points

Frequently Asked Questions

What is a good P/E ratio?

Depends on industry. Tech firms command 25-50. Utilities and banks 10-15.

What does ROE tell you?

How efficiently a company uses shareholder equity to generate profit.

What is the current ratio?

Current Assets ÷ Current Liabilities. Above 2.0 indicates good short-term liquidity.

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