English for Financial Ratios: How to Explain the Numbers

In meetings, a financial ratio is useful only if the listener understands what it measures, how it changed and why it matters. Strong finance English therefore goes beyond reading a number from a spreadsheet.

How to say ratios naturally

• 3.2x → “three-point-two times”
• 18% → “eighteen percent”
• 4.5% → “four-point-five percent”
• 250 bps → “two hundred and fifty basis points”
• 1.3:1 → “one-point-three to one”

For leverage and coverage ratios, times is common in speech. Avoid saying the letter x unless that is the normal convention in your organisation.

Leverage ratios

• “Net debt to EBITDA increased to 3.0 times.”
• “Leverage remains below the covenant limit.”
• “The ratio has risen because debt increased while EBITDA remained broadly flat.”
• “We expect leverage to decline as earnings recover.”

Coverage ratios

• “Interest coverage remains comfortable.”
• “Debt-service coverage weakened during the year.”
• “The ratio remains above the required minimum.”
• “Coverage would become tighter under the downside case.”

Words such as comfortable and tight communicate judgement. Use them only when the underlying context supports that assessment.

Margins

• “The gross margin improved from 28% to 30%.”
• “The EBITDA margin declined by one percentage point.”
• “Margins remain below the historical average.”
• “The improvement reflects a more favourable product mix.”

Liquidity and working-capital ratios

• “The current ratio has improved modestly.”
• “Short-term liquidity remains adequate.”
• “Receivable days increased, indicating slower collection.”
• “Inventory days normalised after the temporary build in Q2.”

Loan-to-value and similar ratios

• “The loan-to-value ratio is approximately 55%.”
• “LTV increased following the decline in the asset valuation.”
• “The structure provides a reasonable equity cushion.”

Explain the movement, not just the formula

Compare these two answers:

• Weak: “Net debt to EBITDA is 3.2x.”
• Stronger: “Net debt to EBITDA increased from 2.6x to 3.2x following the acquisition, although we expect the ratio to decline as the business generates cash.”

The second version tells the listener what happened and what may happen next.

Use a four-part explanation

• Name the ratio: “Turning to net debt to EBITDA…”
• State the number: “…the ratio is currently 3.2 times.”
• Explain the change: “That is up from 2.6 times because of acquisition debt.”
• Interpret it: “It remains manageable, but the headroom is lower than last year.”

Avoid false precision

If the source data is approximate or the definition is still being confirmed, say so.

• “The ratio is approximately 2.8 times.”
• “On our current estimate, coverage remains above two times.”
• “Using the covenant definition, leverage is 3.1 times.”
• “I’d like to confirm the exact calculation after the meeting.”

Financial ratios become easier to discuss when you stop treating them as formulas to recite. Give the number, explain the driver and tell the audience what the ratio means in the context of the decision.