Financial Statement Analysis – Ratio Analysis
What you'll learn
- Analyze financial statements using vertical, horizontal, and ratio analysis, gaining deep insights for informed decision-making.
- Apply vertical analysis to compare financial data as percentages of a common base figure, facilitating meaningful comparisons across companies.
- Utilize horizontal analysis to assess trends, changes, and progress in financial performance over time.
- Evaluate liquidity ratios (e.g., current ratio, quick ratio) to assess a company's short-term solvency and ability to meet obligations.
- Analyze efficiency ratios (e.g., inventory turnover, accounts receivable turnover) to evaluate operational effectiveness and resource utilization.
- Calculate and interpret profitability ratios (e.g., gross margin, return on assets) to assess a company's financial performance and profitability.
- Assess solvency ratios (e.g., debt-to-equity ratio, times interest earned) to evaluate a company's long-term financial stability and ability to repay debt.
- Interpret market prospects ratios (e.g., price-earnings ratio, dividend yield) to assess investor sentiment and market perception.
- Apply ratio analysis to evaluate a company's financial health, strengths, weaknesses, and potential risks.
- Understand the components of a comprehensive financial statement analysis report and effectively communicate findings.
- Basic understanding of accounting principles and financial statements, including familiarity with concepts such as balance sheets, income statements, and cash flow statements.
- Proficiency in basic mathematical calculations and the ability to work with numbers and formulas.
- Knowledge of basic spreadsheet software (e.g., Microsoft Excel, Google Sheets) for data organization and calculations.
- An eagerness to learn and apply financial analysis techniques in a business context.
- Access to a computer or laptop with internet connectivity to access course materials and complete assignments.
In this comprehensive course, you will gain essential skills to analyze financial statements using powerful tools such as vertical analysis, horizontal analysis, and ratio analysis. Whether you are an aspiring accountant, finance professional, or business owner, this course equips you with the knowledge and practical techniques to make informed financial decisions.
Throughout the course, we provide resources to facilitate your learning experience. You will have access to downloadable PDF files and preformatted Excel spreadsheets that aid in understanding and applying the concepts effectively.
We begin by listing and describing the fundamental tools for financial statement analysis. You will explore vertical analysis, which presents financial data as percentages of a common base figure, enabling you to compare companies of different sizes. Additionally, we dive into horizontal analysis, a method used to compare financial data and performance of a company across time, providing valuable insights into its progress and trends.
The course continues with an in-depth exploration of ratio analysis, a common practice in financial statement analysis. You will learn about liquidity ratios, solvency ratios, profitability ratios, and market prospects ratios. Through comprehensive explanations, calculations, and analysis, you will gain a deep understanding of each ratio category and its relevance in evaluating a business's financial performance.
We examine liquidity and efficiency ratios, enabling you to calculate and analyze current ratios, acid-test ratios, and accounts receivable ratios. Furthermore, we explore solvency ratios, covering debt ratios, equity ratios, debt-to-equity ratios, and times interest earned, providing insights into a company's long-term financial stability.
Profitability ratios are another critical aspect covered in the course. You will learn to calculate and analyze profitability ratios, including profit margin ratio, gross margin ratio, return on total assets, return on equity, book value per common share, and earnings per share. These ratios provide valuable information about a company's ability to generate profits and shareholder value.
Market prospects ratios are also discussed, highlighting their significance in evaluating a company's market performance. We explore price-earnings ratio and dividend yield, providing insights into investors' perception of a company's growth potential and dividend distribution.
Finally, we delve into the components of a financial statement analysis report, guiding you on how to effectively communicate your findings. We discuss the capabilities and limitations of software in financial statement analysis, emphasizing the importance of human judgment and critical thinking in the interpretation of results.
Join us on this exciting journey to master the art of financial statement analysis. Enroll today and unlock the tools and techniques that will empower you to make informed decisions based on insightful financial analysis.
Who this course is for:
- Accounting and finance professionals seeking to enhance their skills in financial statement analysis and deepen their understanding of key ratios and analytical techniques.
- Business owners, entrepreneurs, and managers who want to make informed decisions based on a thorough analysis of financial statements.
- Undergraduate and graduate students studying accounting, finance, or related fields who wish to strengthen their knowledge and practical application of financial statement analysis.
- Individuals interested in personal finance and gaining the skills to evaluate and interpret financial statements for making sound financial decisions.
- Investors and financial analysts who want to enhance their ability to assess company performance and make informed investment decisions.
- Anyone with a keen interest in understanding the financial health and performance of companies through the analysis of financial statements.
Through working with students from many different schools, Mr. Steele has learned best practices for helping people understand accounting fast. Learning new skills and finding the best way to share knowledge with people who can benefit from it is a passion of his.
Mr. Steele has experience working as a practicing Certified Public Accountant (CPA), an accounting and business instructor, and curriculum developer. He has enjoyed putting together quality tools to improve learning and has been teaching, making instructional resources, and building curriculum since 2009. He has been a practicing CPA since 2005. Mr. Steele is a practicing CPA, has a Certified Post-Secondary Instructor (CPI) credential, a Master of Science in taxation from Golden Gate University, a Bachelor’s Degree in Business Economics with an emphasis in accounting from The University of California Santa Barbara, and a Global Management Accounting Designation (CGMA) from The American Institute of CPA (AICPA).
Mr. Steele has also authored five books that can be found on Amazon or in audiobook format on Audible. He has developed bestselling courses in accounting topics including financial accounting and QuickBooks accounting software.
In addition to working as an accountant, teaching, and developing courses Mr. Steele has helped create an accounting website at accountinginstruction, a YouTube channel called Accounting Instruction, Help, and How Too, and has developed supplemental resources including a Facebook Page, Twitter Page, and Podcasts that can be found on I-tunes, Stitcher, or Soundcloud. Mr. Steele's teaching philosophy is to make content applicable, understandable, and accessible.
Adult learners are looking for application when they learn new skills. In other words, learners want to be able to apply skills in the real world to help their lives. Mr. Steele’s formal accounting education, practical work experience, and substantial teaching experience allow him to create a curriculum that combines traditional accounting education with practical knowledge and application. He accomplishes the goals of making accounting useful and applicable by combining theory with real-world software like Excel and QuickBooks.
Many courses teach QuickBooks data entry or Excel functions but are not providing the real value learners want. Real value is a result of learning technical skills like applications, in conjunction with specific goals, like accounting goals, including being able to interpret the performance of a business.
Mr. Steele makes knowledge understandable by breaking down complex concepts into smaller units with specific objectives and using step by step learning processes to understand each unit. Many accounting textbooks cram way too much information into a course, making it impossible to understand any unit fully. By breaking the content down into digestible chunks, we can move forward much faster.
Mr. Steele also makes use of color association in both presentations and Excel worksheets, a learning tool often overlooked in the accounting field, but one that can vastly improve the speed and comprehension of learning accounting concepts.
The material is also made understandable through the application of concepts learned. Courses will typically demonstrate the accounting concepts and then provide an Excel worksheet or practice problems to work through the concepts covered. The practice problems will be accompanied by an instructional video to work through the problem in step by step format. Excel worksheets will be preformatted, usually including an answer tab that shows the completed problem, and a practice tab where learners can complete the problem along with a step by step presentation video.
Mr. Steele makes learning accounting accessible by making use of technology and partnering with teaching platforms that have a vision of spreading knowledge like Udemy.