Introduction to Financial Ratio Analysis

Analyze and interpret activity ratios, including receivables, inventory, and payables turnover, plus days and cash conversion cycle, to assess a firm's operating efficiency and working capital management.

Calculate and interpret activity ratios for Sales Smart Co., including receivables turnover, days sales outstanding, inventory turnover, days inventory on hand, payables turnover, and the cash conversion cycle.

Learn how to calculate and interpret liquidity ratios—current, quick, cash—and assess their trends, limitations, and defensive interval to gauge a firm's short-term solvency.

Analyze solvency through debt to equity, debt to capital, and debt to assets, plus financial leverage and coverage ratios, using balance sheet and income statement data to assess financial risk.

Learn to calculate and interpret profitability ratios to gauge a firm's margins and returns on assets, capital, and equity using trend analysis and DuPont formulas.

Learn how valuation ratios like earnings per share, price-earnings, and dividend yield assess a firm’s equity value, compare to industry peers, and reveal under- or overvaluation, with limitations.

Define a peer group of similar enterprises in the same industry to ensure comparisons. Then analyze the cash conversion cycle, activity ratios, liquidity, solvency, profitability, and valuation against industry norms.

Explore Dupont analysis by decomposing return on equity into net profit margin, asset turnover, and financial leverage, using three-way and five-way approaches with a practical Excel example.

Learn to calculate the sustainable growth rate from retention rate and return on equity, compare dividends and retention, and assess growth stability with the coefficient of variation.

Learn how credit risk is measured with key financial ratios and the Altman z-score, combining liquidity, profitability, solvency, and activity metrics to assess company credit worthiness.

Explore segment reporting within a diversified enterprise, analyzing product and geographical segments under IFRS eight and AFSC 280, and learn how ratios reveal profitability and growth opportunities.

Forecast a company's future performance using financial ratios and historical statements to identify trends and project results through sensitivity analysis and scenario analysis.

Learn to apply financial statement analysis and ratio interpretation through the three cs framework for credit risk evaluation—character, collateral, and capacity to repay—to assess credit risk and debt investment quality.

Explore equity investing through ratio analysis and screening, using profitability, liquidity, solvency, and valuation metrics to select stocks while avoiding biases like survivorship, data mining, and lookahead.

Learn how analysts adjust financial statements to improve comparability across different accounting policies and methods. Explore the impact of depreciation methods, inventory valuation, goodwill, and intangible asset revaluations on ratios.