📐 The Ratios Tab

What Is the Ratios Tab?

The Ratios tab is Finmagine's quantitative analysis engine. It computes 30+ financial ratios from a company's balance sheet, P&L, and cash flow data, then classifies each one as Excellent, Good, Average, or Poor against industry-standard thresholds — not arbitrary numbers.

Crucially, every ratio is also benchmarked against the company's sector peers using a percentile score. So you don't just know that a D/E of 0.4 is "Good" in absolute terms — you also know it's in the 80th percentile of its industry, meaning the company is less leveraged than 80% of its competitors.

The Sub-Tab Navigation

At the top of the Ratios tab you'll see between two and four sub-tab buttons depending on the company type:

The "All" View — Rapid Scan Mode

When you click the Ratios tab, you land on the All view — a compact, sortable list showing every ratio at once. This is your high-altitude scan: find the weak spots and strong points before zooming in.

Peer Percentile Labels

Each row in the All view shows where the company's ratio sits relative to its sector peers:

• ↑ High in industry — 75th percentile or above: the company is better than at least three-quarters of its peers on this metric
• ~ In line — 40th to 74th percentile: broadly in line with the industry average
• ↓ Low in industry — below 40th percentile: a relative weakness vs peers

The Classification System

Every ratio is classified against pre-defined thresholds that are specific to that ratio and, where applicable, to the sector. The four classifications are:

Reading a Ratio Card

When you click a category (Liquidity, Leverage, Profitability, etc.), the view switches from the list to individual ratio cards — one per ratio in that category. Each card contains six pieces of information:

Card Elements

1 Border & Name Colour

The card border and ratio name are colour-coded to match the classification — green for Excellent, blue for Good, amber for Average, red for Poor. You can read the health of a ratio before reading a single number.

2 Current Value

The large number in the centre of the card — the ratio's latest computed value. Units vary by ratio type (e.g. times, %, days, ×).

3 Trend Sparkline

A mini bar chart showing how the ratio has moved over recent periods. Green bars = improving (moving toward Excellent). Red bars = deteriorating. Importantly, the direction is ratio-aware — for D/E, lower is better so a falling D/E shows green bars; for ROCE, higher is better so a rising ROCE shows green bars.

4 Peer Percentile

Shown below the value — ↑ High in industry / ~ In line / ↓ Low in industry, with the exact percentile in brackets. This tells you whether the company's absolute ratio is competitive within its sector.

5 Formula

The exact formula used to compute the ratio — fully transparent. If you want to verify the number against your own calculation or understand what drives it, the formula is always shown.

6 Threshold Ranges

The specific number bands used for classification — e.g. Current Ratio: Poor <1.0 · Average 1.0–1.5 · Good 1.5–2.0 · Excellent >2.0. You can see exactly where the company sits and how far it is from the next classification band.

The Six Ratio Categories

Ratios are grouped into six categories. Each answers a distinct question about the business:

Liquidity Can it pay its near-term obligations?

Liquidity ratios test whether the company has enough short-term assets to cover short-term liabilities. A company with poor liquidity risks a cash crunch even if it is profitable on paper.

• Current Ratio — current assets ÷ current liabilities. Above 1.5 is generally healthy.
• Quick Ratio — strips out inventory (less liquid) from current assets. A stricter solvency test.
• Cash Ratio — only cash and equivalents vs current liabilities. The most conservative test.

Leverage How much debt is it carrying?

Leverage ratios measure financial risk. A company that grows through debt is not the same as one that grows through profits — leverage amplifies both gains and losses.

• Debt-to-Equity (D/E) — total debt ÷ equity. Lower is safer for non-financial companies.
• Interest Coverage — EBIT ÷ interest expense. How many times can it pay its interest bill from operating profit?
• Debt-to-EBITDA — how many years of EBITDA would it take to repay all debt?

Profitability How efficiently does it earn?

The most watched category for long-term investors. Profitability ratios test whether the business converts revenue and capital into sustainable profit.

• ROCE — Return on Capital Employed. The single most important ratio for capital-intensive businesses — measures how efficiently every rupee of capital generates operating profit.
• ROE — Return on Equity. How much profit for shareholders per rupee of equity invested.
• OPM% — Operating Profit Margin. What percentage of revenue survives after operating costs.
• NPM% — Net Profit Margin. What percentage survives all the way to the bottom line.
• EBITDA Margin — earnings before interest, tax, depreciation, amortisation as a % of revenue.
• Gross Margin — revenue minus direct cost of goods, as %. Measures pricing power and input cost efficiency.

Efficiency How well does it use its assets?

Efficiency ratios measure operational discipline — how quickly inventory moves, how promptly customers pay, how much revenue the asset base generates.

• Asset Turnover — revenue ÷ total assets. Higher means the company squeezes more sales from every rupee of assets.
• Inventory Days — how many days of inventory does it hold? Lower generally means better supply chain management.
• Debtor Days — average days taken by customers to pay. A rising debtor days can signal collection problems or aggressive revenue recognition.
• Working Capital Days — the cash conversion cycle. Negative working capital (e.g. supermarkets, some IT companies) is a sign of strong market position.

Growth How fast has it been compounding?

Growth ratios show the compounding rate of the business over 1, 3, and 5-year periods — separating genuine growth companies from stagnators.

• Revenue CAGR — compounded annual revenue growth over 3 and 5 years.
• Profit CAGR — PAT compounded growth. The critical check: is profit growing faster or slower than revenue?
• EPS CAGR — earnings per share growth. Adjusts for dilution — if a company raises equity to fund growth, EPS growth may lag profit growth.

Valuation How expensive is the stock?

Valuation ratios put the stock price in context against earnings, book value, and cash flows.

• P/E — price ÷ earnings per share. The most widely cited valuation metric.
• P/B — price ÷ book value per share. Particularly relevant for asset-heavy businesses and banks.
• EV/EBITDA — enterprise value relative to EBITDA. Capital-structure neutral — useful when comparing companies with different debt levels.
• Dividend Yield — annual dividend ÷ price. Higher yield relative to peers can signal value or a falling price.

⚡ Calculated Ratios — Available to All Users

The ⚡ Calculated sub-tab contains derived composite ratios — metrics that require additional computation beyond the standard database ratios. Unlike the main ratio grid (Premium), Calculated ratios are available to all users including guests.

Calculated ratios use a different card style from the standard ratio cards — they are displayed in a Chartbook-style layout with the formula, classification badge, and a multi-year history view. These metrics often capture dynamics that standard ratios miss, such as earnings quality, capital efficiency trends, or composite health scores.

Banking KPIs & Sector KPIs

🏦 Fin KPIs — Banking & NBFC Companies

For companies in company_banking_metrics — banks, NBFCs, and other financial institutions — a dedicated Fin KPIs sub-tab appears. This replaces the standard ratio metrics that are inapplicable to lending businesses.

Key banking metrics shown:

• NIM (Net Interest Margin) — the spread between what the bank earns on loans and pays on deposits. The banking equivalent of gross margin.
• GNPA% — Gross Non-Performing Assets as a percentage of advances. The key asset quality metric — higher means more bad loans.
• CASA Ratio — Current Account + Savings Account deposits as a % of total. Higher CASA = cheaper funding cost.
• CRAR — Capital to Risk-weighted Assets Ratio. The regulatory capital adequacy measure — must stay above RBI mandated minimums.
• Cost-to-Income — operating expenses as a % of income. Lower is more efficient.

Each metric includes a trend sparkline covering recent quarters, so you can see whether NIM is expanding or compressing and whether GNPA is improving or worsening.

Sector KPIs — Operational Metrics PREMIUM

For companies in sectors with meaningful operational metrics — Hotels, Hospitals, Pharma, IT, Telecom, Insurance, Cement, Auto, Oil & Gas, and Realty — an additional sector-specific KPI sub-tab appears when data is available.

Examples by sector:

• Hotels — RevPAR (Revenue per Available Room), Occupancy %
• Hospitals — Revenue per Bed, Occupancy %
• Pharma — ANDA filings, US DMF filings
• IT — Revenue per Employee Cost ratio
• Telecom — ARPU (Average Revenue Per User)
• Auto — Total vehicles sold by category
• Cement — Realization per tonne
• Oil & Gas — Production volumes (crude, gas, LPG)

Recommended Ratios Tab Workflow

Step 1 Land on "All" — scan the full ratio list. Count how many Poor ratings appear and check if any are also "↓ Low in industry". That's your red flag list.

Step 2 Check the trend direction on the Poor ratios. A Poor ratio that's been improving for three consecutive periods is very different from one that's deteriorating.

Step 3 Drill into Profitability — ROCE and ROE are the two ratios that most reliably separate good businesses from bad ones over the long term. Are they Excellent or Good? Are they improving?

Step 4 Check Leverage — especially if the company has been growing fast. Is debt rising faster than equity? Is interest coverage healthy?

Step 5 Read Valuation last — a great business at a poor valuation is still worth investigating. A terrible business at a cheap valuation is usually a trap. Use the Valuation category to understand what you're paying for what you're getting.

Step 6 Open ⚡ Calculated for the composite metrics — these often surface earnings quality issues that the standard ratios miss.