1. What is a Money Ratio Calculator?

Definition: This calculator computes the ratio between two monetary amounts, showing both the decimal value and simplified whole number ratio.

Purpose: It helps financial analysts, business owners, and individuals compare monetary values and understand their proportional relationships.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Amount1 — First monetary value (any currency)
• Amount2 — Second monetary value (same currency)

Explanation: The calculator first computes the decimal ratio, then simplifies it to the smallest whole numbers that maintain the same proportion.

3. Importance of Money Ratios

Details: Money ratios are crucial for financial analysis, budgeting, investment comparisons, and understanding cost structures in business.

4. Using the Calculator

Tips: Enter both monetary amounts in the same currency. The calculator will show both the decimal ratio and simplified whole number ratio.

5. Frequently Asked Questions (FAQ)

Q1: What does a 2:1 ratio mean?
A: It means the first amount is twice as large as the second amount.

Q2: Can I use different currencies?
A: No, both amounts should be in the same currency for accurate ratio calculation.

Q3: How is the simplified ratio calculated?
A: The calculator finds the greatest common divisor (GCD) and divides both amounts by it to get whole numbers.

Q4: What if one amount is zero?
A: Both amounts must be greater than zero to calculate a meaningful ratio.

Q5: Where would I use money ratios?
A: Common uses include debt-to-income ratios, price-to-earnings ratios, budget allocations, and cost-benefit analysis.