>ƒFinForge

Creating Ratios

Learn how to create custom financial ratios using the Ratio Maker tool.

What are Financial Ratios?

Financial ratios are calculations that use financial statement data to measure:

  • Profitability (e.g., Profit Margin, ROE)
  • Liquidity (e.g., Current Ratio, Quick Ratio)
  • Leverage (e.g., Debt-to-Equity)
  • Efficiency (e.g., Asset Turnover)
  • Valuation (e.g., P/E Ratio, P/B Ratio)

Opening the Ratio Maker

From Excel

  1. Open FinForge.xlsm
  2. Run the macro: OpenRatioMaker()
    • Press Alt + F8
    • Select OpenRatioMaker
    • Click Run

From Python

cd <project-root>
.\.venv\Scripts\Activate.ps1
python Importing/ratio_maker.py

From Electron UI

  1. Open the FinForge workspace window
  2. Click the Ratios tab
  3. Use the formula builder with token buttons and field pickers
  4. Save ratios directly to the shared config

Creating Your First Ratio

Step 1: Click “New Ratio”

The Create Ratio dialog opens.

Step 2: Enter Ratio Name

Give your ratio a descriptive name:

  • “Gross Margin”
  • “Current Ratio”
  • “Debt to Equity”

Step 3: Build the Formula

Use the field selector and operators to build your formula.

Available Data Sources:

Prefix Source Example Fields
IS: Income Statement Total Revenue, Net Income, EBITDA
BS: Balance Sheet Total Assets, Total Debt, Cash
CF: Cash Flow Operating Cash Flow, Free Cash Flow
P: Price/Market Data Closing Price, Volume, High, Low
RATIO: Other Ratios Use your previously created ratios

Available Operators:

Button Operation
+ Addition
- Subtraction
* Multiplication
/ Division
( Open parenthesis
) Close parenthesis

Step 4: Add Notes (Optional)

Add a description or notes about the ratio:

  • What it measures
  • How to interpret it
  • Reference ranges

Step 5: Save

Click Save to store the ratio in ratio_config.json.

Formula Examples

Profitability Ratios

Gross Margin

(IS: Total Revenue - IS: Cost Of Revenue) / IS: Total Revenue

Operating Margin

IS: Operating Income / IS: Total Revenue

Net Profit Margin

IS: Net Income / IS: Total Revenue

Return on Assets (ROA)

IS: Net Income / BS: Total Assets

Return on Equity (ROE)

IS: Net Income / BS: Stockholders Equity

Liquidity Ratios

Current Ratio

BS: Current Assets / BS: Current Liabilities

Quick Ratio

(BS: Current Assets - BS: Inventory) / BS: Current Liabilities

Leverage Ratios

Debt to Equity

BS: Total Debt / BS: Stockholders Equity

Debt to Assets

BS: Total Debt / BS: Total Assets

Efficiency Ratios

Asset Turnover

IS: Total Revenue / BS: Total Assets

Using Other Ratios

ROE using DuPont Analysis

RATIO: Net Profit Margin * RATIO: Asset Turnover * RATIO: Equity Multiplier

Using Numbers

Interest Coverage (example with constant)

IS: EBIT / IS: Interest Expense

Half of Net Debt

BS: Net Debt / 2

Understanding Syntax Highlighting

As you type, the formula is color-coded:

Color Meaning
Green Income Statement fields (IS:)
Light Blue Balance Sheet fields (BS:)
Purple Price/Cash Flow fields
Orange Operators (+, -, *, /)
Yellow Parentheses
Gold Other Ratios (RATIO:)
Light Blue Numbers
Red + Wavy Errors (typos, invalid fields)

Using the Fraction Display

For visual clarity, you can toggle fraction display:

  1. Check “Use Fraction Display” checkbox
  2. The division button changes to show a fraction bar
  3. Formulas are easier to read visually

Editing Existing Ratios

  1. Select the ratio in the list
  2. Click Edit
  3. Modify the name, formula, or notes
  4. Click Save

Note: If the ratio is assigned to an Excel column, the column header is automatically updated with the new name.

Deleting Ratios

  1. Select the ratio in the list
  2. Click Delete
  3. Confirm the deletion

Warning: If the ratio is assigned to an Excel column, unassign it first.

Where are Ratios Stored?

Ratios are saved in: Importing/ratio_config.json

{
  "ratios": {
    "Gross Margin": {
      "formula": "(IS: Total Revenue - IS: Cost Of Revenue) / IS: Total Revenue",
      "notes": "Measures profitability after direct costs"
    },
    "Current Ratio": {
      "formula": "BS: Current Assets / BS: Current Liabilities",
      "notes": "Measures short-term liquidity"
    }
  }
}

Tips for Creating Good Ratios

  1. Use descriptive names - “Gross Margin” not “GM1”
  2. Add notes - Document what the ratio measures
  3. Test with known values - Verify calculations are correct
  4. Use parentheses - Ensure correct order of operations
  5. Check field names - Use exact field names from the data

Troubleshooting

Red Error Highlighting

Cause: Invalid field name Solution: Check spelling, use the field selector dropdown

“Field not found” Error

Cause: Field doesn’t exist in the data Solution: See Available Data Reference for valid field names

Calculation Shows #N/A

Cause:

  • Data missing for the ticker
  • Division by zero

Solution:

  • Verify data exists for the ticker
  • Add logic to handle zero denominators

Ratio Not Appearing in Manager

Cause: Save failed or file permission issue Solution:

  • Check if ratio_config.json is writable
  • Try saving again

Next Steps

After creating ratios: