The Top 11 Financial Statement Ratios

And why the quick ratio isn’t valid.

Ratios are tools used to evaluate a company’s financial statements.

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Here are some of the more commonly used ratios.

1. Working Capital Ratio

Current assets ÷ current liabilities

Posted on April 3, 2023

Edward Mendlowitz

About the Author

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Edward Mendlowitz, CPA, ABV, PFS, is a partner at Withum, a forward-thinking, technology-driven advisory, and accounting firm. Ed has over 40 years of public accounting experience, is recognized as one of the Top 100 Most Influential People in Accounting by Accounting Today, and is the CPA Trendlines "Practice Doctor." His latest handbook for CPA Trendlines is 77 Ways to Wow! The Handbook for Small-Business Advisory Services.

Ed is also the author of "Memoirs of a CPA," available at Amazon.

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"Memoirs" tells his story as a CPA and provides an inside look at what CPAs do and how they run their accounting "business." CPAs must serve clients effectively and exceptionally, recruit, train, retain and grow staff, and charge fees that clients happily pay because of the value they receive while the CPA earns a living, funds a retirement account, grows infrastructure, and perhaps makes a profit. This book tells how he did all of this and much more.

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He is a licensed, certified public accountant in the states of New Jersey and New York and is accredited by the American Institute of Certified Public Accountants (AICPA) in business valuation (ABV), certified in financial forensics (CFF) and as a personal financial specialist (PFS). Ed is also admitted to practice before the United States Tax Court and has testified as an expert witness in federal and state court regarding business valuations, and twice at the House Ways and Means Committee on tax reform, fairness, and reduction. A City College of New York graduate, Ed earned his bachelor of business administration degree.

He is a member of the AICPA, the New Jersey Society of Certified Public Accountants (NJSCPA) and the New York State Society of Certified Public Accountants (NYSSCPA). In addition, Ed was a founding partner of Mendlowitz Weitsen, LLP, CPAs, which merged with Withum in 2005. Currently, he serves on the NYSSCPA Estate Planning Committee and was chairman of the committee that planned the NYSSCPA’s 100th Anniversary. Ed, the author of 19 books, has also written hundreds of articles for business and professional journals and newsletters.

He is the contributing editor to the Practitioners Publishing Company’s 706/709 Deskbook, the AICPA’s Management of an Accounting Practice Handbook, Corporate Controller’s Handbook and Wiley’s Handbook on Budgeting and is on the editorial board of Bottom Line/Personal newsletter and the Journal of Accountancy Member Panel on Business Valuation. Appearing regularly on television news programs, Ed has also been quoted in numerous major newspapers and periodicals in the United States. He received the Lawler Award for the best article published in 2001 in the Journal of Accountancy.

Ed frequently speaks to many professional and business groups, including the AICPA, NJSCPA, NYSSCPA, American Management Association, the National Committee for Monetary Reform, the University of Medicine and Dentistry in N.J., and many more. For 11 years, he taught courses on financial analysis, corporate financial policy and theory, monetary and fiscal policy, and managerial accounting in the MBA program at Fairleigh Dickinson University.

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