A complete guide to Financial Statement Analysis with excel

Explore profitability ratios and analyze a company’s performance by comparing profitability against similar firms, using the income statement to derive EBIT, operating income, and net income after tax.

Calculate the gross profit margin ratio by dividing gross profit by revenue. Use this to see what percent of revenue is gross profit, with Amazon example around 41 percent.

Analyze the operating profit margin ratio, defined as earnings before interest and taxes divided by total revenue, to evaluate how well a company controls operating expenses and demonstrates management strength.

Explore EBITDA margin, defined as earnings before interest, taxes, depreciation, and amortization divided by sales, to compare profitability across companies while ignoring non-cash items and capital structure.

Calculate the net profit margin ratio by dividing net profit (after expenses) by total sales to express the percentage of profit earned per dollar of revenue.

Analyze profitability through return on equity, combining income statement and balance sheet to measure net profit per dollar of shareholders equity.

Compute return on assets by dividing net income by total assets to gauge profitability relative to asset investment; higher ROA shows asset use in telecommunications services, car manufacturers, and railroads.

Compute ROE and ROA for Amazon using net income, equity, and total assets in Excel. The lesson demonstrates calculating equity and asset-based returns from the 2019 10-K.

Explore solvency analysis using debt to equity ratios to assess long-term leverage and financial risk, using balance sheet data to compare long-term debt with total equity.

Explore the debt to assets ratio, a solvency metric equal to total debt divided by total assets, illustrating debt financing levels with Amazon's 163b debt and 225b assets.

Identify solvency concerns with the interest coverage ratio (ICR), calculated as EBITDA divided by interest expense, to show how well a company can service its debt.

Analyze working capital components, receivables, payables, and inventory, to understand the cash conversion cycle and calculate days sales outstanding, revealing how quickly customers pay.

Calculate days payable outstanding by dividing average accounts payable by cost of goods sold and multiplying by 365, illustrated by Amazon's 24 days to collect and 94 days to pay.

Calculate the fixed assets turnover ratio by dividing revenue by the average fixed assets to gauge how efficiently a company converts assets into sales.

Calculate the inventory turnover ratio by dividing cost of goods sold by average inventory to show how many times a company sells and replaces its stock, informing financial statement analysis.

Learn to apply liquidity ratios—current ratio, Wicke ratio, and cash ratio—to assess a company's ability to cover current debts, using examples like ABC with a 2:1 current ratio.

Calculate Amazon's current ratio by dividing total current assets by total current liabilities, yielding about 1.10, with commentary on industry norms and cash flow implications.

Learn how the quick ratio, more conservative than the current ratio, uses cash, cash equivalents, marketable securities, and other quick assets against current liabilities while excluding inventory and prepaid expenses.

Compute Amazon's quick ratio from the 10-K by excluding inventories, using cash, marketable securities, and receivables to reach about 0.86, then note inventory's rapid convertibility makes the quick ratio misleading.

Calculate Amazon's cash ratio by dividing cash and cash equivalents plus marketable securities by total current liabilities, yielding a healthy 0.63.

Calculate free cash flow to the firm from EBIT. Deduct taxes, add depreciation, and subtract capex and working capital to obtain cash flows to all capital providers before interest.

Perform a practical exercise to calculate free cash flow to the firm for ABC Limited, using EBIT, depreciation, capital expenditure, taxes, and payments such as interest and dividends.

Explore why FCFF ignores interest expense yet incorporates tax shields via debt, showing that tax savings are embedded in the cost of debt and avoid double counting.

Define free cash flow to equity, the cash available to equity shareholders, with the formula: net income, tax, add depreciation, adjust working capital, minus debt repayments, plus new debt.

Apply a practical fcfe calculation by deducting interest expense and taxes from net income, including depreciation, capex, and a debt repayment to determine free cash flow to equity.

Compute Amazon's free cash flow to equity by starting with net income, adding non-cash charges and working capital changes; deduct capital expenditures and debt repayments to reach 15,786 million dollars.

Calculate Amazon's free cash flow to the firm by adjusting operating income with taxes, depreciation, stock-based compensation, and changes in working capital and capital expenditures, arriving at 26,306 million.

Learn how to locate Apple’s annual 10-K data from investor relations, then analyze ratios and cash flows using the consolidated statements of operations, balance sheets, and equity.

Assess how Apple demonstrates strong profitability through high gross, operating, and net margins, with ROE of 61% and ROA of 16.2%.

Analyze Apple's liquidity using current, quick, and cash ratios from the consolidated balance sheet. Current ratio is 1.54, quick 1.50, cash ratio 0.95, signaling strong cash-rich liquidity.

Calculate solvency ratios for Apple Inc., using balance sheet figures to derive debt-to-equity, assets ratio, and interest coverage, and note the impact of an aggressive share repurchase program.

Calculate the interest coverage ratio by dividing operating profit (EBIT) by interest expense for Apple Inc., yielding about 18 times and a view on solvency and debt management.

Analyze Apple Inc.'s activity ratios in Excel by calculating days sales outstanding and days payable from average receivables and cost of goods sold to assess working capital management.

Compute Apple's fixed assets turnover ratio by dividing total revenue by average fixed assets, notably property, plant, and equipment, while excluding non-current assets.

Compute the inventory turnover ratio by dividing average inventory by cost of goods sold using Apple Inc.'s 2019 balance sheet and income statement, illustrating strong inventory management efficiency.

Compute free cash flow to equity for Apple Inc. by adjusting net income for non-cash charges, changes in working capital, capital expenditures, and debt repayments to reach FCFE.

Compute free cash flow to firm for Apple from EBIT, taxed at 15.94%, add depreciation, adjust for working capital and capital expenditures, exclude debt repayments, yielding 57,380 million dollars.

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