Financial Statement Analysis Tool
Complete financial statement analyzer with 20+ automated ratio calculations, DuPont analysis, trend analysis, and industry benchmarks. Convert any PDF to Excel with 99.6% accuracy. Unlimited conversions for $79/month—no per-page fees.
What You Get
Liquidity Ratios
Ability to meet short-term obligations
Current Ratio
Current Assets / Current LiabilitiesAbility to pay short-term debts
Example Calculation
Quick Ratio (Acid-Test)
(Current Assets - Inventory) / Current LiabilitiesImmediate liquidity without selling inventory
Example Calculation
Cash Ratio
Cash & Equivalents / Current LiabilitiesMost conservative liquidity measure
Example Calculation
Working Capital
Current Assets - Current LiabilitiesNet liquid assets available
Example Calculation
Profitability Ratios
How efficiently the company generates profit
Gross Profit Margin
(Revenue - COGS) / Revenue × 100Profit after direct costs
Example Calculation
Operating Profit Margin
Operating Income / Revenue × 100Profit from core operations
Example Calculation
Net Profit Margin
Net Income / Revenue × 100Bottom-line profit after all expenses
Example Calculation
Return on Assets (ROA)
Net Income / Total Assets × 100How efficiently assets generate profit
Example Calculation
Return on Equity (ROE)
Net Income / Shareholder Equity × 100Return to shareholders on their investment
Example Calculation
Efficiency Ratios
How well the company uses its assets
Asset Turnover Ratio
Revenue / Average Total AssetsRevenue generated per dollar of assets
Example Calculation
Inventory Turnover
COGS / Average InventoryHow many times inventory is sold and replaced
Example Calculation
Days Sales in Inventory (DSI)
365 / Inventory TurnoverAverage days to sell inventory
Example Calculation
Accounts Receivable Turnover
Net Credit Sales / Average Accounts ReceivableHow quickly receivables are collected
Example Calculation
Days Sales Outstanding (DSO)
365 / Receivables TurnoverAverage collection period
Example Calculation
Leverage Ratios
How much debt the company uses
Debt-to-Equity Ratio
Total Debt / Total EquityProportion of debt vs equity financing
Example Calculation
Debt-to-Assets Ratio
Total Debt / Total AssetsPercentage of assets financed by debt
Example Calculation
Equity Multiplier
Total Assets / Total EquityFinancial leverage (DuPont analysis component)
Example Calculation
Interest Coverage Ratio
EBIT / Interest ExpenseAbility to pay interest from operating income
Example Calculation
DuPont Analysis: ROE Decomposition
Break down Return on Equity into three key drivers
ROE = Net Profit Margin × Asset Turnover × Equity MultiplierNet Profit Margin
Net Income / RevenueAsset Turnover
Revenue / Total AssetsEquity Multiplier
Total Assets / Total EquityExample Calculation
Net Profit Margin
10%
Asset Turnover
1.25×
Equity Multiplier
1.8×
= ROE
22.5%
DuPont analysis reveals which factor drives ROE: profitability (margins), efficiency (asset use), or leverage (debt). Improving any component increases ROE.
Trend Analysis Techniques
Track financial performance over time using horizontal, vertical, and ratio trend analysis.
Horizontal Analysis (Year-over-Year)
Compare each line item to the same period in prior years
((Current Year - Prior Year) / Prior Year) × 100Example
Revenue grew 20% YoY, indicating business expansion
Vertical Analysis (Common Size)
Express each line item as percentage of a base figure
(Line Item / Base Figure) × 100Base Figure:
- income Statement: Revenue (100%)
- balance Sheet: Total Assets (100%)
Example
COGS is 60% of revenue, leaving 40% for gross profit
Ratio Trend Analysis
Track key ratios over multiple periods
Key Ratios to Track:
- Current Ratio
- Gross Margin %
- ROE
- Debt-to-Equity
Identify improving/declining trends in financial health metrics
Frequently Asked Questions
What are the most important financial ratios to track?
The five most critical ratios are: (1) Current Ratio (liquidity), (2) Gross Profit Margin (profitability), (3) Return on Equity (shareholder returns), (4) Debt-to-Equity Ratio (leverage), and (5) Operating Cash Flow Margin (cash generation). These cover liquidity, profitability, efficiency, leverage, and cash flow—the five pillars of financial health.
How do I perform DuPont analysis on financial statements?
DuPont analysis breaks ROE into three components: ROE = Net Profit Margin × Asset Turnover × Equity Multiplier. Calculate each: Net Profit Margin (Net Income/Revenue), Asset Turnover (Revenue/Assets), and Equity Multiplier (Assets/Equity). Multiply them together to get ROE. This reveals whether ROE comes from profitability, efficiency, or leverage.
What is a good current ratio for financial health?
A current ratio between 1.5 and 3.0 is generally healthy. Below 1.0 indicates potential liquidity problems (can't pay short-term debts). Above 3.0 may indicate inefficient use of current assets. However, optimal ratios vary by industry—retailers may operate at 1.2-1.5, while manufacturers need 2.0-2.5.
How do I convert PDF financial statements to Excel for analysis?
Upload your PDF financial statements to Zera Books and our Zera AI extracts all line items, amounts, and periods into structured Excel format with 99.6% accuracy. The tool auto-calculates 20+ financial ratios, performs DuPont analysis, and generates trend comparisons. Export to Excel, CSV, or import directly to QuickBooks/Xero for further analysis.
What Excel formulas should I use for ratio analysis?
Key formulas include: Current Ratio (=CurrentAssets/CurrentLiabilities), Gross Margin (=(Revenue-COGS)/Revenue), ROE (=NetIncome/Equity), Debt-to-Equity (=TotalDebt/Equity), and Asset Turnover (=Revenue/AvgAssets). Use cell references to link to your balance sheet and income statement data. Zera Books auto-generates all these formulas when converting PDFs to Excel.
How often should I perform financial statement analysis?
Monthly analysis is ideal for internal management. Calculate key ratios monthly, compare to prior periods, and track trends. Quarterly analysis is standard for reporting to stakeholders. Annual analysis is required for tax purposes and strategic planning. More frequent analysis (weekly) may be needed during cash flow challenges or rapid growth periods.
What industry benchmarks should I use for comparison?
Compare your ratios to industry averages. Software companies: 25-35% operating margin. Manufacturing: 10-15% operating margin, 1.5-2.0 current ratio. Retail: 5-10% net margin, 1.2-1.5 current ratio. Healthcare: 8-12% net margin. Use resources like Risk Management Association (RMA), BizMiner, or IBISWorld for detailed industry benchmarks.
How do I identify red flags in financial statements?
Red flags include: (1) Current ratio < 1.0 (liquidity crisis), (2) Declining gross margins (pricing pressure), (3) Inventory turnover slowing (obsolete inventory), (4) DSO increasing (collection problems), (5) Debt-to-equity > 2.0 (overleveraged), (6) Negative operating cash flow despite profits (earnings quality issues), (7) Interest coverage < 2.0 (debt service risk). Run comprehensive ratio analysis to spot these early.
What's the difference between horizontal and vertical analysis?
Horizontal analysis compares line items across time periods (e.g., 2025 revenue vs 2024 revenue, showing 20% growth). Vertical analysis expresses each line item as a percentage of a base figure within the same period (e.g., COGS is 60% of revenue, operating expenses are 25% of revenue). Use horizontal to spot trends, vertical to understand financial statement composition.
How do I automate financial statement analysis?
Use Zera Books to convert PDF statements to Excel with auto-calculated ratios, DuPont analysis, and trend comparisons. Upload monthly statements and instantly get ratio dashboards, variance analysis, and benchmark comparisons. Export to Excel for custom analysis or import directly to QuickBooks/Xero. Automate the manual data entry and calculation work—focus on interpreting results and making decisions.
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