Financial Ratio Analysis: Assess Company Performance & Risk

Name: Financial Ratio Analysis: Assess Company Performance & Risk
Rating: 4.9 (3 reviews)

Learn to analyze liquidity, profitability, efficiency, and risk using financial ratios to assess companies confidently

Created byExcel Mojo

Last updated 5/2026

English

What you'll learn

Evaluate a company’s liquidity and ability to meet short-term obligations
Analyze operational efficiency using turnover ratios
Understand how companies convert inventory and receivables into cash
Assess profitability using margins and return ratios
Measure financial risk using leverage and coverage ratios
Interpret how financial decisions impact business performance
Compare companies using key financial ratios
Understand the full cash conversion cycle
Estimate sustainable growth using financial metrics

Course content

1 section • 14 lectures • 1h 56m total length

What Is Ratio Analysis2:48
This video explains what ratio analysis is and how it helps interpret financial statements beyond absolute numbers. You’ll understand how ratios help compare performance over time and across companies.
Current Ratio5:51
Learn how the current ratio measures a company’s ability to meet short-term obligations. The video explains current assets, current liabilities, and how to interpret good vs risky liquidity positions.
Quick Ratio8:50
This session introduces the quick ratio and explains why inventory is excluded from liquidity analysis. You’ll understand how it provides a more conservative view of short-term financial strength.
Accounts Receivable Turnover Ratio8:36
Learn how to calculate accounts receivable turnover using credit sales and average receivables. This video also explains how to interpret collection efficiency and compare it with industry benchmarks.
Inventory Turnover Ratio9:09
This lecture explains how inventory turnover measures how efficiently a company converts inventory into sales. You’ll understand how interpretation varies across different industries.
Accounts Payable Turnover Ratio12:11
Understand how accounts payable turnover measures how frequently a company pays its suppliers. The session also explains how purchases are calculated using the base equation.
Cash Conversion Cycle13:00
This video combines inventory, receivables, and payables to measure how long cash remains tied up in operations. You’ll learn how to calculate and interpret the full cash conversion cycle.
Gross Profit Margin9:39
Learn how gross profit margin measures profitability after deducting direct costs of goods sold. The session also discusses industry comparisons and nuances in financial reporting.
Net Income Margin7:44
This lecture explains how net income margin reflects overall profitability after operating and non-operating expenses. You’ll understand how to calculate and interpret net profit as a percentage of sales.
Return on Total Equity8:25
Learn how Return on Equity (ROE) measures how effectively a company generates profit from shareholders’ funds. The video explains the formula, calculation, and interpretation.
Return on Owner's Equity5:19
This session explains how return on owner’s equity differs from total equity by excluding non-controlling interests. You’ll learn how to adjust net income and calculate the ratio correctly.
Leverage Ratio7:02
Understand how the debt-to-equity ratio measures financial risk and capital structure. The lecture explains what constitutes debt and equity and how to interpret leverage levels.
Interest Coverage Ratio9:20
Learn how the interest coverage ratio measures a company’s ability to pay interest using operating earnings. The video also compares EBIT vs EBITDA approaches for better interpretation.
Sustainable Growth Rate9:04
This final lecture explains how sustainable growth rate estimates how fast a company can grow without external financing. You’ll understand the role of retention ratio and return on equity in growth analysis.

Requirements

No prior knowledge of ratio analysis required
Basic understanding of financial statements is helpful but not mandatory
Willingness to learn step by step through practical explanations

Description

This course contains the use of artificial intelligence.

Understand how to evaluate a company’s financial health using ratio analysis and make decisions like a financial analyst.

If you’ve ever looked at financial statements and wondered what the numbers actually mean, this course will help you go beyond the basics and start interpreting financial performance with clarity.

Ratio analysis is not just about calculating numbers. It’s about understanding what those numbers reveal about a company’s liquidity, profitability, efficiency, and risk, and how to use that insight to make informed decisions.

In this course, you’ll build a strong foundation in ratio analysis by learning how different financial ratios are calculated, interpreted, and applied in real scenarios.

You’ll begin with the fundamentals of ratio analysis and understand how it helps compare performance across time and between companies. From there, the course covers key categories of ratios step by step:

Liquidity ratios to assess short-term financial stability
Efficiency ratios to evaluate how effectively a company uses its resources
Profitability ratios to understand how well a company generates earnings
Leverage ratios to measure financial risk and capital structure
Coverage ratios to analyze the ability to meet financial obligations
Growth metrics to estimate sustainable expansion

Each ratio is explained with a focus on interpretation, so you understand what the numbers actually mean, not just how to calculate them.

By the end of this course, you will be able to evaluate a company’s financial position, identify strengths and weaknesses, and connect different ratios into one complete picture of business performance.

How This Course Helps You

Build skills used by financial analysts and investors
Analyze company performance with confidence
Prepare for finance roles and interviews
Strengthen your understanding of business performance

What Makes This Course Different

Focus on interpretation, not just calculation
Clear and structured learning approach
Covers all major ratio categories in one place
Designed to build financial analysis thinking
Step-by-step explanations to avoid confusion

By the End of This Course, You Will Be Able To

Evaluate a company’s financial health using key ratios
Identify strengths and weaknesses in financial performance
Compare companies using structured analysis
Understand how different ratios connect to each other
Apply ratio analysis in real-world scenarios

About the Instructor

This course is taught by Dheeraj Vaidya, Co-Founder of WallStreetMojo and ExcelMojo. He is an IIT and IIM alumnus, holds the CFA and FRM certifications, and brings over 20 years of experience teaching finance concepts to students and professionals. Over the years, he has trained 100K+ learners across different industries, focusing on practical, real-world applications of financial analysis.

He has worked with organizations such as JPMorgan, CLSA, Bennett Coleman, and Adventity, gaining extensive exposure to the practical application of financial analysis in business environments.

His teaching approach focuses on clarity, structured learning, and real-world interpretation, helping you not just understand formulas, but think like a financial analyst

Who this course is for:

Beginners who want to understand financial statements and ratios
Students preparing for finance or accounting careers
Professionals looking to strengthen financial analysis skills
Anyone interested in evaluating companies or business performance