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How to calculate Rent-to-income ratio

The Rent-to-income ratio formula, with plain worked examples you can check yourself.

Rent-to-income ratio = R ÷ I × 100

The result is a percentage (%).

Worked examples

R = 800 · I = 2000Rent-to-income ratio = 40%
R = 1200 · I = 4000Rent-to-income ratio = 30%
R = 400 · I = 2000Rent-to-income ratio = 20%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Multiply by 100 to show the answer as a percentage.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Cash & Liquidity.

Related terms

Cash flowLiquidityWorking capitalOverdraft

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