ratio

ratio definition - business

ratio

The relation between two quantities when compared with one another mathematically. For example, the most frequently used ratio among investors is the price-earnings ratio. Financial analysts, investors, and managers use ratios to evaluate many factors, such as the attractiveness of a stock or the operating efficiency of a company. Also called financial ratio. See also activity ratio, debt management ratio, liquidity ratio, profitability ratio.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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