Equity ratio
The equity ratio is equity divided by the balance sheet total; it shows what share of assets is financed from own funds and counts as a measure of a business’s resilience.
Definition
As a rough guide, thirty per cent and above counts as solid in trade and crafts, while manufacturing businesses with heavy fixed assets often sit below that. Industry comparisons say more than absolute rules.
The ratio can improve without anything changing: whoever does not distribute profit raises it; whoever runs down stock shortens the balance sheet and raises it too. Meaning comes from the trend.
What the software must be able to do
What helps is a ratio sheet that computes it continuously — with the prior year beside it. Where that is missing, it is a spreadsheet formula nobody updates once a year.
Checked Aug 2026
More terms under Bookkeeping and retention: Accrual principle Accrued liabilities Annual accounts Association accounting Balance sheet Balance sheet total Book value Break-even point Business assets Business expenses Cash book Cash flow statement Cash receipts Contribution margin Cost centre Current assets Debit and credit Depreciation Double-entry bookkeeping Duty to keep accounts EBIT EBITDA Equity Financial year Fixed assets Fixed costs Foreign currency General ledger Gross profit Hidden reserves Income statement Inventory count Journal Journal entry Liabilities Liquidity Loss carry-forward Membership dues Net profit Opening balance sheet Overheads Pass-through item Prepaid expenses Provision Record-keeping ordinance Reserves Retained profit Simple accounts Swiss SME chart of accounts Tamper resistance Turnover Value adjustment Variable costs Volunteer-run structure Voucher Year-end closing modules