How to Master Financial Statements: Financial Ratio Analysis and Interpretation

Financial statements contain important information, but what can this data show us about the health of a company? Welcome to ratio analysis.

Ratios help stakeholders to identify trends, compare results with other companies and assess performance. This course will show you how to use ratios to evaluate various aspects of a business, such as profitability, liquidity, efficiency, gearing and investment.

What are ratios? How do we calculate them? What do they mean and what are the implications for the business? You’ll have the chance to address these questions and more on this course.

On this course, you’ll have the opportunity to learn to measure how efficiently a company is using its capital to generate profits using the ROCE ratio, or return on capital employed ratio.

You’ll identify the terms used for these ratios (such as earning before interest and tax, or EBIT), explore profitability ratios, and learn how to calculate the gross and net profit margin ratio.

What are efficiency ratios, and how can they help a company to better use its assets and manage liabilities? This course will also show you how to use efficiency ratios in tandem with other key factors – including inventory and fixed asset turnover, trade receivables and payables, overtrading, and sales per employee.