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A Beginners Guide to Financial Ratio Analysis

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Last updated 5/2022 English
Overview

This course will teach you how to compute and interpret the basic ratios used in financial statement analysis, including the following: 

Activity Ratios

  1. Accounts Receivable Turnover
  2. Days Sales in Accounts Receivable
  3. Inventory Turnover
  4. Days of Inventory on Hand
  5. Accounts Payable Turnover
  6. Number of Days of Payables
  7. Cash Conversion Cycle

Liquidity Ratios

  1. Current Ratio
  2. Quick Ratio
  3. Cash ratio
  4. Defensive Interval and others

Solvency Ratios

  1. Debt-to-Equity
  2. Debt-to-Capital
  3. Interest Coverage
  4. Fixed Charge Coverage and others

Profitability Ratios

  1. Gross Margin
  2. Profit margin
  3. Return on Assets
  4. Return on Equity and others

Valuation Ratios

  1. Earnings per Share
  2. Earnings Yield
  3. Price-Earnings Ratio
  4. Dividend Yield
  5. Dividend Payout and others

You will be able to use a spreadsheet to conduct a complete analysis of a company using Sherwin-Williams, Facebook, and Kroger as examples, including: Dupont analysis, equity analysis, segment analysis, and credit analysis.

You will be able to interpret the results and suggest remedial action to improve the company's performance, noting when certain accounting methods could skew the results.

Lastly, you will be able to use stock screening software to find stock investments using the ratios learned in the course.

The course provides the following resources: PowerPoint slide handout for the nineteen modules; spreadsheet financial ratios packs that compute all of the ratios for Sherwin-Williams, Facebook, Kroger; blank spreadsheet for you to use with a company of your choice; and ratio handout that provides summary for all of the ratios, including their computation.

This course will help students gain insight into a company's operations and help prepare them for a rewarding career in accounting and finance, including: 

  1. Corporate finance
  2. Investment Banking
  3. Private Equity
  4. Mergers and Acquisitions
  5. Hedge Fund Analysis
  6. Retail and Corporate Banking
  7. Business Development
  8. Financial Consulting
  9. Management Consulting
  10. Auditing, both internal and external
  11. Risk management
  12. Asset Management
Who this course is for

Anyone working, or seeking employment, in the fields of finance and accounting, or anyone who desires to analyze companies to make stock investment decisions

Testimonials
  1. The starter course i was looking for with respect to reading & analyzing financial statements ~ Louis Y
  2. For a beginner like me, this course was very insightful, easy to follow and clear explanations & definitions. I am so happy for taking this course! ~ Kisha W
  3. Gave me a new look, understanding, and appreciation to reading revenue, cash, and expenses ~ M DeJesus
  4. I have definitely learned alot in this course! I have gained a decent understanding of what financial statements mean. This course has delivered what it promised ~ T Givans
  5. It was an eye opener, having things broken down in simpler terms ~ Cedric S
  6. Perfect for someone being newly introduced to understanding a companies finances ~ De'Jon F
  7. Would say for anyone looking to start or even increase their basic knowledge on financial statements this course is great ~ Tom C
What you'll learn
  1. Compute a complete set of activity, liquidity, solvency, profitability, and valuation ratios ratios to analyze a company
  2. Perform a Dupont analysis, equity analysis, segment analysis and credit analysis for a company
  3. Interpret the results of a complete ratios analysis
  4. Compare a company's performance to another company
  5. Interpret how several different accounting methods can skew the results of a ratio analysis
  6. Suggest remedial actions to improve a company's performance as revealed by a ratio analysis
  7. Find stock investments using stock screening software and the ratios we will learn in the course
Requirements

Have a basic knowledge of balance sheets and income statements.