Cheat sheet

Financial ratios one-pager, expanded

Valuation ratios price the stock; these describe the business. Grouped the way analysts actually use them: can it profit, can it survive, is it well run.

Ratio	In one sentence	The trap
Gross margin	Revenue minus the direct cost of the product, as a percent: the purest read of pricing power.	Compare only within an industry; software at 75% versus a grocer at 25% describes business models, not quality.
Operating margin	Profit after running costs but before interest and tax: how disciplined the machine is.	One-off gains and cost-cut harvests can flatter a year. Direction over five years beats any single reading.
Net margin	What finally survives of each pound of revenue after everything.	The most stylable margin: tax quirks and adjustments live here. Cross-check against cash flow.
ROE	Profit against shareholders' equity: what the owners' capital earns.	Debt shrinks equity and inflates ROE mechanically. A 40% ROE on a debt mountain is leverage wearing a medal; read with debt-to-equity beside it.
ROIC / ROCE	Profit against ALL capital employed (debt and equity): the leverage-proof quality measure compounding machines score high on.	Sustained double digits is the signal; a single great year is often a cycle, not a moat.
Debt-to-equity	Borrowed money against owners' money: how much of the business is built on credit.	Sector norms vary hugely (utilities live leveraged; software should not). Negative equity from buybacks makes the ratio meaningless; check absolute debt too.
Interest cover	Operating profit divided by interest cost: how many times over the debt bill is paid.	Below roughly 3x, bad years become dangerous years fast. Computed on a good year, it flatters; stress it.
Current ratio	This year's assets against this year's obligations: can it pay its bills without borrowing.	Too high can mean lazy cash; supermarkets run below 1 safely because stock sells before suppliers are paid. Context, always.
Asset turnover	Revenue per pound of assets: how hard the asset base works.	Meaningful mostly in comparison: against the company's own history and its direct rivals.
FCF conversion	Free cash flow as a share of net income: how much of the reported profit turns into actual money.	Persistently below ~80% asks where the profit is going; persistently above 100% will not last forever either. The trend is the tell.

The working set for a ten-minute read: gross margin, operating margin, ROIC, debt-to-equity, interest cover, FCF conversion. All of them live on each SteadyShares stock page with the terms explained.

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Educational information, not financial advice. Figures current as of July 2026 where dated; allowances and rates change, so check the source before acting.