Financial ratios are financial metrics that determine relationships between aspects of a company’s operations and financial position. Although financial statement ratios have long been used to assist finance and accountanting professionals with evaluating the health and profitability of organizations, many people focus on the “calculation” rather than “what the ratio may be communicating". It is important to fully understand the purpose of the ratios and what they can tell you about your organization.
Most balance sheet ratios are basic and easy to calculate. They include only balance sheet items such as assets, liabilities and shareholder’s equity in their calculation.
The various financial statement ratio types include:
- Liquidity and Solvency Ratios
- Financial Leverage and Debt Ratios
- Asset Efficiency or Turnover Ratios
- Profitability ratios
- Market value ratios
This course will focus on Liquidity, Solvency and Debt ratios.
Note: This course is also a part of The Controllership Series.
Learning Objectives
- Explore basic financial ratio analyses and math concepts.
- Explore the concept of solvency ratios including:
- Equity Ratio
- Debt Ratio
- Debt/Equity Ratio
- Total Debt/Total Assets
- Times Interest Earned
- Fixed Assets/Net Worth
- Explore the concept of liquidity ratios including:
- Current ratio (Working Capital (WC) ratio)
- Quick ratio (acid test ratio)
- Cash ratio
- Working capital
- Debt/Inventory
- Explore math theories to analyze ratio changes.
- Explore a comprehensive example of ratio calculation.
Included In Certifications
This course is included in the following Certification Programs:
18 CoursesFinancial Statement Preparation, Reporting and Auditing Certification
- Financial Statement Introduction
- GAAP Principles, Assumptions and Considerations
- GAAP Presentation of Financial Statements
- Management Discussion and Analysis (MD&A) Update
- Sarbanes Oxley Overview
- Sarbanes-Oxley Section 302: ICFR
- XBRL (Extensible Business Reporting Language) Introduction to Basics - Updated
- XBRL - Connection to SOX 302/404 and Critical Roles
- Analyzing Financial Ratios - Solvency, Liquidity and Debt
- Analyzing Financial Ratios - Leverage
- Analyzing Financial Ratios - Performance And Efficiency
- Financial Statement Audit in Accordance with GAAS - General Standards
- Financial Statement Audit in Accordance with GAAS - Conducting the Audit
- Financial Statement Audit in Accordance with GAAS - Auditors' Report and Opinion
- Introduction to Accounting for Income Taxes Based on Income
- Practical Application For Accounting For Income Taxes Based On Income Part 1
- Practical Application For Accounting For Income Taxes Based On Income Part 2
- FASB Codification Research System
15 CoursesManagement Oversight, Analysis and Internal Controls Certification
- Management Internal Control Essentials
- Comprehensive Examination of COSO 2013: Components and Principles
- Keys to an Effective Code of Conduct
- Fraud Risk Assessments
- Enterprise Risk Management 101
- Identifying and Implementing the Proper Balance of Internal Controls
- Information Technology (IT) Controls in Emerging Business Environments
- Analyzing Financial Ratios - Solvency, Liquidity and Debt
- Analyzing Financial Ratios - Leverage
- Effectively Managing and Controlling Travel and Entertainment (T&E) Expenses
- Keys to Understanding Conflicts of Interest
- Documentation Methods For Internal Control Processes
- Segregation of Duties for Core Business Processes
- Professional Skepticism - Keys to Maintaining
- Whistleblower Hotlines - Effective Management
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Prerequisites
No advanced preparation or prerequisites are required for this course.