Accounting Ratio

It's all about the metrics. Did we pay too much for our inventory or labor? Are our products priced high enough? The competition has 6% higher growth margins than we do, so what are we doing wrong?

Accounting ratios compare line items from all over the bean counting map. Things like gross margin over sales, operating margin over sales, debt to EBITDA ratios, turnover ratios of inventory, days sales outstanding, and a zillion other trivia contest fractions. Accountants deeply involved in the operating management of a company will have a spreadsheet with a hundred or more of these metrics open and ready to be analyzed when they meet with the CEO, CFO, and other honchos in their firm.