the proportional relationship of one thing to another
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ratio ra‧ti‧o [ˈreɪʆiəʊ ǁ ˈreɪʆoʊ] noun [countable]
a relationship between two amounts that is represented by a pair of numbers showing how much greater one amount is than the other:
• The company's ratio of current assets to current liabilities is 5 to 1.
ˈacid ˌratio also ˌacid-ˈtest ˌratio, ˈcurrent ˌratio, ˈliquid ˌratio test
ACCOUNTING the relationship between the total amount that a business has in cash, in its bank accounts, and owed by customers, and the total amount that it owes to suppliers. By checking this relationship it is possible to see whether the business is
solvent (= able to pay immediately the money it owes)
an amount showing the number of new orders received by a company compared to the number of products sold by the company:
• Its book-to-bill ratio rose to 1.08, which means that for every $100 of microchip orders that are shipped, manufacturers received $108 of new orders.
a bank's capital as a percentage of what it lends, an important measure in calculating if it is likely to fail;
= solvency ratio AmE:
• Among the commercial banks, capital adequacy ratios are very poor and new capital may be necessary.
ˈcash ˌratio also ˌcash ˈdeposit ˌratio
BANKING money that a bank must have in cash as a percentage of money customers have put into the bank, to be sure that the bank has enough to pay people wanting to take money out of the bank and as a control on
money supply:
• Banks hope the rate for cash ratio deposits will drop from 0.35% of their sterling deposits to 0.2%.
colˈlection ˌratio
ACCOUNTING the average number of days it takes for money owing to a company to be paid, a measure of the company's effectiveness in collecting payment and customers' ability to pay
the ratio between the amount of money that an insurance company receives from customers in Premiums, and the amount that it has to pay out when people make claims:
• A combined ratio above 100 indicates that the company is paying out more in claims and expenses than it is taking in premiums.
the amount of a company's debt in relation to the amount of share capital it has;
= DEBT RATIO:
• Colgate raised $460 million in equity to retire debt and lower its debt-equity ratio from 50/50 to about 30/70.
ˈdebt ˌratio
• Japan's corporate debt ratio increased four times faster than that of the U.S. in the 1980s.
2. ECONOMICS a country's debt in relation to the value of all the goods and services it produces:
• Rising government spending including interest payments will move the debt ratio to about 55% of GDP.
the amount of a country's interest payments on its foreign debt as a percentage of its exports:
• Large early debt repayments using receipts from privatisation have helped Hungary cut its debt service ratio to 24% this year from 41% two years ago.
the amount that a company pays out to shareholders in dividends as a percentage of its profits. This calculation is used especially in the US:
• German firms tend to have much lower dividend payout ratios than companies in the English-speaking world.
a company's
dividend (= the amount of profit it pays to shareholders in a particular period of time) as a percentage of its share price
exˈpense ˌratio
1. ACCOUNTING the costs of operating a company shown as a percentage of sales:
• K-mart's expense ratio is 23% for its discount stores, compared with only 15% for Wal-Mart's discount stores.
2. FINANCE the costs of operating an
investment fund shown as a percentage of the amount the fund earns from its investments:
• This imaginary fund owns bonds yielding 10% but the fund also has a 1% annual expense ratio; the portfolio is only returning 9% after expenses.
3. INSURANCE the costs of operating an insurance company shown as a percentage of the money it receives from people paying for insurance policies:
• Equitable is one of the lowest cost operators in the industry, with an expense ratio — expenses to premiums — of 4.3%.
a comparison of one figure from a company's
financial statement with another in order to measure its performance or to see if it can pay its debts:
• All our financial ratios are fine except for research and development spending, where we are still below revenue.
the amount of stock that a company has compared with the amount of goods that they have sold in a particular period of time:
• In September, U.S. retailers' inventory-to-sales ratio was 1.57.
the amount of cash or other
liquid asset S that a company has in relation to the amount of money it owes, or that a bank has in relation to the amount of money that customers have put into the bank:
• If a financial institution's liquidity ratio is too high, it will make too little profit.
ˌloan-to-ˈvalue ˌratio abbreviation LVR
FINANCE PROPERTY the value of a house, land etc in relation to the value of the loan used to buy it:
• In order to refinance, they'll have to pay down their first mortgage so that the loan-to-value ratio meets the requirements.
one of the ratios that the people in charge of a company use to see how it is performing
a PE ratio calculated on the base of how much profit is actually distributed to shareholders in a particular period of time
a calculation of whether a business could pay its debts if sales stopped or slowed down. It takes into account money owed to suppliers, tax authorities etc, things such as bonds that can be easily sold and turned into cash, and money owed by customers etc. Supplies of materials, work in progress, and finished goods are not included as they might not be easily turned into cash
a PE ratio calculated on the base of how much profit a company makes in a particular 12-month period, whether it is actually distributed to shareholders in that period of time or not
ˈpayout ˌratio
FINANCE the percentage of a company's profits paid to shareholders in
dividend S in a particular period of time:
• Beware of very high payout ratios. If a company is paying out 80% to 90% of its earnings in dividends, it's a danger sign.
PˈD ˌratio also ˌprice-ˈdividend ˌratio abbreviation PDR FINANCE
the relationship between the present share price of a company, and the
dividend that was paid for the previous year, which is used in order to compare companies:
• The price-dividend ratio is a commonly used way of looking at how expensive or cheap stocks are.
PˈE ˌratio or P-E ratio also ˌprice-ˈearnings ˌratio written abbreviation PE
ACCOUNTING FINANCE a company's share price divided by the amount of profits it makes for each share in a 12-month period. PE ratios are normally calculated on the base of all the profit made in the period, whether or not the profit is paid out to shareholders in that period:
• Statistics on earnings growth and P-E ratios are useful to money managers in determining which markets and individual stocks to trade.
• She recently began selling growth stocks with high PE ratios but knew that these could really suffer if the market turned down.
• We buy cheap shares with low P-E ratios that are out of favour with other investors.
the amount of money a financial institution possesses in relation to the amount of money it has lent:
• the insurance fund's thinnest reserve ratio in its history
a bank's capital as a percentage of what it lends, an important measure in calculating if it is likely to fail;
= capital ratio AmEˈturnover ˌratio
FINANCE the relationship between the value of shares, bonds etc that an
fund buys or sells in a particular period, and the average total amount that the fund holds in that period
— see also Basle ratios
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ratio UK US /ˈreɪʃiəʊ/ noun [C] (plural ratios)
► the ratio of sth to sth »
The ratio of exports to imports also improved from 70.4% to 83.2%.
»
The ratio of house prices to earnings is 55% above its average level in the past 20 years.
»
The ratio of men to women at the conference was 10:1.
»
The company was performing well according to all the key ratios.
→
See also ACCOUNTING RATIO(
Cf. ↑
accounting ratio),
ACID TEST RATIO(
Cf. ↑
acid test ratio),
ASSET TURNOVER RATIO(
Cf. ↑
asset turnover ratio),
BOOK-TO-BILL RATIO(
Cf. ↑
book-to-bill ratio),
CAPITAL ADEQUACY RATIO(
Cf. ↑
capital adequacy ratio),
CAPITAL RATIO(
Cf. ↑
capital ratio),
CASH RATIO(
Cf. ↑
cash ratio),
CASH DEPOSIT RATIO(
Cf. ↑
cash deposit ratio),
COLLECTION RATIO(
Cf. ↑
collection ratio),
COMBINED RATIO(
Cf. ↑
combined ratio),
CURRENT RATIO(
Cf. ↑
current ratio),
DEBT/EQUITY RATIO(
Cf. ↑
debt/equity ratio),
DEBT RATIO(
Cf. ↑
debt ratio),
DEBT COVERAGE RATIO(
Cf. ↑
debt coverage ratio),
DEBT SERVICE RATIO(
Cf. ↑
debt service ratio),
DIVIDEND PAYOUT RATIO(
Cf. ↑
dividend payout ratio),
DIVIDEND-PRICE RATIO(
Cf. ↑
dividend-price ratio),
EXPENSE RATIO(
Cf. ↑
expense ratio),
FINANCIAL RATIO(
Cf. ↑
financial ratio),
INVENTORY-TO-SALES RATIO(
Cf. ↑
inventory-to-sales ratio),
LIQUID RATIO(
Cf. ↑
liquid ratio),
LIQUIDITY RATIO(
Cf. ↑
liquidity ratio),
LOAN-TO-VALUE RATIO(
Cf. ↑
loan-to-value ratio),
MANAGEMENT RATIO(
Cf. ↑
management ratio),
NET P/E RATIO(
Cf. ↑
net P/E ratio),
NET QUICK ASSETS RATIO(
Cf. ↑
net quick assets ratio),
OPERATING EXPENSE RATIO(
Cf. ↑
operating expense ratio),
PAYOUT RATIO(
Cf. ↑
payout ratio),
P/D RATIO(
Cf. ↑
P/D ratio),
P/E RATIO(
Cf. ↑
P/E ratio),
PRICE-DIVIDEND RATIO(
Cf. ↑
price-dividend ratio),
PRICE/EARNINGS RATIO(
Cf. ↑
price/earnings ratio),
RESERVE RATIO(
Cf. ↑
reserve ratio),
SOLVENCY RATIO(
Cf. ↑
solvency ratio),
STOCK TURNOVER RATIO(
Cf. ↑
stock turnover ratio),
TURNOVER RATIO(
Cf. ↑
turnover ratio)