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Financial Statement Analysis: Ratios and Working Capital
Rating: 4.3 out of 5(15 ratings)
72 students

Financial Statement Analysis: Ratios and Working Capital

Interpret profitability, liquidity and solvency ratios, examine working capital and calculate WACC.
Created byRowan Malherbe
Last updated 8/2021
English
English [Auto],

What you'll learn

  • Calculate and interpret the profitability ratios covered in the course.
  • Calculate and interpret the liquidity and solvency ratios covered in the course.
  • Explain the working capital cycle and its relationship to cash flow.
  • Calculate weighted average cost of capital using the approach taught in the lesson.
  • Use the ratios exercise and solution to check your calculations and identify errors.

Course content

2 sections • 10 lectures • 1h 12m total length

  • Why this course?1:24

    Explore how to use financial ratios to evaluate profitability, solvency, and liquidity, including step-by-step calculations and interpretation to analyze financial statements, manage working capital, and guide investment decisions.

  • What do I get with this course?

Requirements

  • A basic understanding of a balance sheet and an income statement is expected.
  • Be comfortable with percentages and basic arithmetic. Have a calculator or spreadsheet available for your workings.

Description

Find the story behind the figures

Two businesses can report the same profit and tell very different financial stories. Ratios help you ask why. This focused course introduces profitability, liquidity, solvency and working capital analysis, helping you move from recognising financial statement figures to explaining what the calculations suggest about a business.

Connect ratios to business questions

The course covers the working capital cycle before turning to solvency, liquidity and profitability ratios. You will consider calculations in relation to the part of the business they describe, rather than treating a ratio as an answer on its own. A separate lesson covers weighted average cost of capital, commonly shortened to WACC.

Test your understanding

The curriculum includes a ratios formula sheet, a ratios exercise and an exercise solution. Use the formula sheet as a reference, attempt the exercise before viewing the solution and compare your workings carefully. Where your answer differs, check both the figures you selected and the calculation you used. Repeat the relevant lesson if you can reproduce a formula but cannot yet explain the result.

Build on the basics

This course is suitable for accounting and finance learners refreshing these topics, business owners who want to discuss financial performance more clearly, and people beginning to read company financial information. Basic familiarity with a balance sheet and an income statement will help you concentrate on the analysis.

Make your analysis more useful

Take the next step beyond calculating a number: explain what it suggests and what you would investigate next. This course introduces ratios, working capital and WACC; it is not a complete company valuation or investment-selection method.

Who this course is for:

  • Accounting and finance learners seeking introductory ratio-analysis practice.
  • Business owners and non-finance staff with basic financial statement knowledge.
  • Readers of company financial information who want to understand ratios without treating them as investment recommendations.

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