Calculate your debt-to-income (DTI) ratio, a critical metric used by lenders to evaluate your ability to manage monthly debt payments. A lower DTI indicates stronger financial health and improves your chances of loan approval.
Total income before taxes and deductions
Monthly housing payment
Monthly auto loan payment
Minimum monthly credit card payments
Student loans, personal loans, etc.
Sums all monthly debt obligations and divides by gross monthly income, expressed as a percentage. Lenders typically prefer a DTI below 36%.
Measure financial leverage using the debt-to-equity ratio.
Evaluate short-term liquidity with the current ratio.
Measure immediate liquidity using the quick (acid-test) ratio.
Evaluate stock valuation using the Price-to-Earnings ratio.
Measure profitability relative to shareholders' equity with ROE.
Assess asset efficiency with the Return on Assets ratio.
