Finding and Calculating Ratio Data#

Before you can analyze ratios, you need reliable data. This lesson covers where to find financial information and how to calculate ratios from source documents.

The most reliable ratio data comes directly from company filings (10-K, 10-Q) with the SEC. While financial websites provide convenience, understanding the source data gives you an analytical edge.

Primary Data Sources#

1. SEC Filings (Most Authoritative)#

The Securities and Exchange Commission maintains the EDGAR database, where all public companies must file their reports.

Filing Type	Contents	Frequency
10-K	Annual report with complete financials	Yearly
10-Q	Quarterly update	Every 3 months
8-K	Material events disclosure	As needed
Proxy (DEF 14A)	Executive compensation, governance	Yearly

How to access: Visit sec.gov/edgar and search by company name or ticker symbol.

2. Company Investor Relations#

Most companies publish financial data on their investor relations websites, often in more readable formats than SEC filings. Look for:

Annual reports (often better formatted than 10-K)
Earnings presentations
Financial fact sheets
Historical data downloads

3. Financial Data Providers#

For convenience, many investors use financial websites that aggregate and calculate ratios:

Source	Strengths	Limitations
Yahoo Finance	Free, comprehensive, historical data	Occasional data errors
Google Finance	Clean interface, quick lookups	Limited ratio selection
Morningstar	Excellent ratio analysis, 10-year history	Premium features require subscription
SEC EDGAR	Official source, most accurate	Requires manual calculation

Data Verification

Always cross-reference important data points across multiple sources. Financial websites occasionally have errors or use different calculation methodologies.

Extracting Data from Financial Statements#

To calculate ratios yourself, you need to find the right line items in financial statements.

Income Statement Items#

Ratio Component	Where to Find It
Revenue	Top line of income statement
Gross Profit	Revenue minus Cost of Goods Sold
Operating Income	Also called EBIT or Operating Profit
Net Income	Bottom line of income statement
EPS	Usually shown at bottom of income statement

Balance Sheet Items#

Ratio Component	Where to Find It
Total Assets	Bottom of assets section
Current Assets	First section of assets
Total Liabilities	Sum of current and long-term liabilities
Shareholders' Equity	Assets minus Liabilities
Total Debt	Short-term debt + Long-term debt

Cash Flow Statement Items#

Ratio Component	Where to Find It
Operating Cash Flow	Bottom of operating activities section
Capital Expenditures	In investing activities (usually negative)
Free Cash Flow	Operating CF minus CapEx

Trailing vs. Forward Metrics#

Ratios can be calculated using historical data (trailing) or analyst estimates (forward).

Trailing Twelve Months (TTM)#

TTM metrics use the most recent 12 months of actual results.

Calculation: Add the last 4 quarters of data

Example: TTM Revenue for a company reporting in March 2024:

Q1 2024: $25B
Q4 2023: $28B
Q3 2023: $24B
Q2 2023: $23B
TTM Revenue: $100B

Why Use TTM?

TTM provides the most current picture of actual performance. It's updated quarterly, so you're never using data more than 3 months old.

Forward Estimates#

Forward metrics use analyst projections for future periods.

Metric	Common Usage
Forward P/E	Next 12 months estimated EPS
Forward Revenue	Next fiscal year estimate
Forward Growth	Projected EPS growth rate

Sources for estimates: Yahoo Finance, Refinitiv, FactSet, Bloomberg

Limitation: Estimates can be wrong. Use forward metrics alongside trailing metrics, not instead of them.

Common Calculation Examples#

Price-to-Earnings (P/E) Ratio#

Formula: Stock Price / Earnings Per Share

Example for Apple (hypothetical):

Stock Price: $185
TTM EPS: $6.16
P/E = $185 / $6.16 = 30.0x

Return on Equity (ROE)#

Formula: Net Income / Average Shareholders' Equity

Example:

Net Income (TTM): $95 billion
Beginning Equity: $60 billion
Ending Equity: $62 billion
Average Equity: ($60B + $62B) / 2 = $61 billion
ROE = $95B / $61B = 155.7%

For balance sheet ratios, using average values (beginning + ending / 2) is more accurate than using ending values alone, as income is earned throughout the year.

Current Ratio#

Formula: Current Assets / Current Liabilities

Example:

Current Assets: $135 billion
Current Liabilities: $125 billion
Current Ratio = $135B / $125B = 1.08x

Building Your Ratio Toolkit#

Recommended Workflow#

Start with SEC filings for the most accurate source data
Use financial websites for quick ratio lookups and screening
Calculate key ratios yourself when accuracy is critical
Cross-reference multiple sources to verify important data

Creating a Template#

Consider building a spreadsheet template with:

Key financial statement line items
Formulas for your most-used ratios
Space for multiple years to track trends
Comparison columns for peer companies

This investment of time upfront will save hours on future analysis.

Key Takeaways

SEC filings (10-K, 10-Q) are the most authoritative data sources
Financial websites provide convenience but may have occasional errors
TTM (Trailing Twelve Months) metrics provide current actual performance
Forward estimates use analyst projections—use with caution
For balance sheet ratios, use average values for more accurate calculations
Build a personal ratio template to streamline your analysis process