Running a Profitable Business: Understanding Financial Ratios

Description

In this course, you will :

• Determine the financial statement on which you can find the source of financing for a company's acquisition of assets.
• Name the category from which liabilities must be paid.
• Explain what you're looking for when you examine a company's operating income percentage.
• Describe the steps involved in calculating accounts receivable turnover.
• Determine the two components to be used in calculating the current ratio.
• Remember the stumbling block you must avoid when performing financial ratio analysis.

Syllabus :

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

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