Financial Statement Analysis – Ratio Analysis

Master the Art of Financial Statement Analysis: Unlocking Insights through Vertical, Horizontal, and Ratio Analysis

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

What Will I Learn?

• Analyze financial statements using vertical, horizontal, and ratio analysis, gaining deep insights for informed decision-making.
• Apply vertical analysis to compare financial data as percentages of a common base figure, facilitating meaningful comparisons across companies.
• Utilize horizontal analysis to assess trends, changes, and progress in financial performance over time.
• Evaluate liquidity ratios (e.g., current ratio, quick ratio) to assess a company's short-term solvency and ability to meet obligations.
• Analyze efficiency ratios (e.g., inventory turnover, accounts receivable turnover) to evaluate operational effectiveness and resource utilization.
• Calculate and interpret profitability ratios (e.g., gross margin, return on assets) to assess a company's financial performance and profitability.
• Assess solvency ratios (e.g., debt-to-equity ratio, times interest earned) to evaluate a company's long-term financial stability and ability to repay debt.
• Interpret market prospects ratios (e.g., price-earnings ratio, dividend yield) to assess investor sentiment and market perception.
• Apply ratio analysis to evaluate a company's financial health, strengths, weaknesses, and potential risks.
• Understand the components of a comprehensive financial statement analysis report and effectively communicate findings.

Requirements

• Basic understanding of accounting principles and financial statements, including familiarity with concepts such as balance sheets, income statements, and cash flow statements.
• Proficiency in basic mathematical calculations and the ability to work with numbers and formulas.
• Knowledge of basic spreadsheet software (e.g., Microsoft Excel, Google Sheets) for data organization and calculations.
• An eagerness to learn and apply financial analysis techniques in a business context.
• Access to a computer or laptop with internet connectivity to access course materials and complete assignments.

Target audience

• Accounting and finance professionals seeking to enhance their skills in financial statement analysis and deepen their understanding of key ratios and analytical techniques.
• Business owners, entrepreneurs, and managers who want to make informed decisions based on a thorough analysis of financial statements.
• Undergraduate and graduate students studying accounting, finance, or related fields who wish to strengthen their knowledge and practical application of financial statement analysis.
• Individuals interested in personal finance and gaining the skills to evaluate and interpret financial statements for making sound financial decisions.
• Investors and financial analysts who want to enhance their ability to assess company performance and make informed investment decisions.
• Anyone with a keen interest in understanding the financial health and performance of companies through the analysis of financial statements.