How to use ratios to conduct a deeper financial analysis
What you will learn
An introduction to financial analysis by ratios.
Understand what is a balance sheet.
Understand what is an income statement.
Touch the importance of liquidity for the business and the ratios used to analyze it.
Ability to differentiate between effectiveness and efficiency.
Ability to determine the profitability of the business.
To have an arsenal of ratios to use, such as Profit Margin Ratio, Gross Profit Margin Ratio, Accounts Receivable Turnover Ratio
Being able to look behind the numbers
Description
For any individual wishing to discover finance, at some point he will be led to know or learn the financial analysis,no matter the reason, being a banker or business owner to an investor managing his stock portfolio and aiming to buy the most profitable stocks, perhaps inspired by the greatest Warrant Buffet.
I have to ask the question, Is a lack of accounting training holding you back from getting value from these important financial documents?
The financial statements, these being the Income Statement, Balance Sheet & Cash Flow Statement, allow you to tell the ‘story’ of a business. You can tell its history, its strengths and weaknesses and sometimes even its future. Financial numbers alone will not tell you everything about a business.
The statements tell a concise story that can be used by investors and managers to test and assess strategy, as well as assist in putting together action plans in regards to whether or not to buy, hold or sell a stock or what to do internally within the business. But being able to look behind the numbers and gleam this story takes some skill.
However, not lots of skill! Accountants, like many professions, like to make their skills seem more complicated than what they really are; after all, this allows them to charge higher fees.
But ANY business manager, investor or student can quickly learn some key techniques that will allow them to tell the story of almost any business on the planet.
Accountants have the ability to turn vast amounts of data into actionable information, but they tend to give their own names to this ‘actionable information’ and in effect create a language of their own. And if this is all foreign to you: firstly, congratulations on taking the first steps, you won’t regret it. Secondly, in this courseI will try to clearly, simply and concisely break down this ‘foreign language’ and its arithmetic tools into something more digestible, irrespective of whether you’re a marketer, barista, production manager or even a retiree managing their nest egg.
this course has several objectives, all in the way of giving the learner an arsenal of tools allowing him to conduct a complete financial analysis, with effectiveness and above all efficiency.
efficiency is the key to success, being efficient means being able to reach the goal in the minimum amount of time with the minimum of used resources , here are the ratios.
the ratios which by their simplicity make it possible to manipulate the financial analysis and to create a model of analysis that suits the user according to his objective.
If you are looking to identify the company with the most profitable stocks in terms of dividends, you only have to mobilize these small tools called ratios in a certain way and here is in a moment you identify the most profitable stocks.
again if you want to know if your business is solvent, you only have to use the ratios again and you will have the information you want.