Corporate Finance #2 Financial Ratios

Gain Financial Insights and Make Informed Decisions with Ratio Analysis in Corporate Finance

Created by: Robert (Bob) Steele
CPA, CGMA, M.S. Tax, CPI

What Will I Learn?

• Define the concept of ratio analysis and explain its significance in corporate finance decision-making.
• Apply the DuPont System of analysis to evaluate financial performance and assess the key drivers of profitability.
• Calculate and interpret the return on investment (ROI) in various scenarios, demonstrating proficiency in evaluating investment profitability.
• Analyze and interpret key ratios such as return on assets, total asset turnover, and profit margin to assess operational efficiency and financial performance.
• Evaluate the financial health and risk profile of an organization using the return on equity and debt-to-equity ratios.
• Calculate and interpret the accounts receivable collection period to assess the effectiveness of credit and collection policies.
• Assess the organization's ability to meet its interest obligations using the times interest earned and fixed charge coverage ratios.
• Conduct trend analysis of return on equity to identify patterns and trends in financial performance.
• Utilize ratio analysis to compare and evaluate the performance of different divisions within an organization.
• Construct a projected income statement and balance sheet using ratio analysis techniques to forecast future performance.

Requirements

• Basic understanding of financial statements, including familiarity with balance sheets and income statements.
• Access to a computer or laptop with internet connectivity to access the course materials and complete practice exercises.
• An eagerness to learn and apply ratio analysis techniques in corporate finance decision-making.
• Openness to hands-on practice and willingness to solve practice problems using Microsoft Excel.
• A strong desire to enhance financial analysis skills and make informed decisions based on financial insights.

Target audience

• Professionals working in the field of corporate finance, financial analysis, or related roles, who want to deepen their understanding of ratio analysis and enhance their decision-making skills.
• Accounting and finance students at the undergraduate or graduate level, who want to gain practical knowledge and skills in applying ratio analysis techniques in corporate finance.
• Business owners and entrepreneurs seeking to improve their financial analysis capabilities and make informed financial decisions for their organizations.
• Financial analysts and investment professionals who want to sharpen their analytical skills and utilize ratio analysis for evaluating investment opportunities.
• Managers anProfessionals in non-finance roles who interact with finance and accounting teams and want to develop a better understanding of ratio analysis and its applications.d executives involved in financial decision-making processes within their organizations, aiming to enhance their financial literacy and analytical capabilities.
• Anyone with a keen interest in corporate finance, financial analysis, and making informed decisions based on financial insights.