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LinkedIn Learning

Running a Profitable Business: Understanding Financial Ratios

via LinkedIn Learning

Overview

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Explains what financial ratios such as ROA and ROI mean and how they can be used to identify financial trends or assess a company's financial status.

Syllabus

Introduction
  • Gain financial insights
1. What Is Financial Ratio Analysis?
  • Introduction to financial ratio analysis
2. A Review of the Financial Statements
  • What are the financial statements?
  • The balance sheet
  • The income statement
  • The statement of cash flows
3. The DuPont Framework
  • The DuPont company: creating accounting history
  • Return on equity
  • DuPont framework
  • DuPont framework: Target and Walmart
  • Problem description to explanation
4. Common-Size Financial Statements
  • Olympic medals and GDP per capita
  • Common size overview
  • Target's common-size income statement
  • Target's common-size balance sheet
5. Profitability Ratios
  • McDonald's most profitable items
  • Comparing profitability with financial ratios
  • Specific profitability ratios
  • Price-earnings ratio
6. Efficiency Ratios
  • Mark-up vs. profitability: Harry Winston vs. Walmart
  • Number of days' sales in inventory
  • Average collection period
  • Length of the operating cycle
  • Fixed asset turnover and other utilization ratios
7. Leverage Ratios
  • Singapore Airlines' low leverage
  • Current ratio
  • Leverage ratios
8. Potential Pitfalls to Ratio Analysis
  • Historical data pitfalls and baseball
  • Excess data and comparability issues
  • "Smoking gun" and historical data biases
Conclusion
  • What financial ratio analysis can NOT do

Taught by

Jim Stice and Kay Stice

Reviews

4.8 rating at LinkedIn Learning based on 1127 ratings

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