Financial Analysis Techniques

The analyst's toolkit: the financial analysis process, common-size and trend analysis, the four ratio families (activity, liquidity, solvency, profitability), how ratios fit together through DuPont analysis of ROE, industry-specific ratios, and how ratio analysis feeds forecasting.

1. 1. The analysis process and ratio basicsGood analysis starts with a clear purpose, compares the company with a benchmark, and treats every ratio as a clue to what happened, not an explanation of why.Free13 min
2. 2. Common-size, trend analysis and graphsCommon-size statements, trend comparisons, graphs and regression turn raw financial data into patterns that show the structure of a company and how it is changing.13 min
3. 3. Activity ratiosActivity ratios measure how efficiently a company uses its working capital and long-term assets: how fast inventory sells, customers pay and suppliers are paid, and how much revenue each unit of assets produces.Video · 7 min15 min
4. 4. Liquidity ratios and the cash conversion cycleLiquidity ratios test whether a company can meet its short-term obligations, from the broad current ratio down to the strict cash ratio, while the cash conversion cycle shows how long cash is tied up in operations.Video · 6 min13 min
5. 5. Solvency ratiosSolvency ratios measure the ability to meet long-term obligations: debt ratios show how much of the financing is debt, and coverage ratios show how comfortably earnings cover interest and other fixed charges.Video · 7 min12 min
6. 6. Profitability ratiosProfitability ratios measure the return a company earns, either on each unit of sales (margins) or on the capital invested in it (returns on assets, capital and equity).Video · 5 min13 min
7. 7. Integrated ratio analysis and DuPontRatios explain each other: DuPont analysis breaks ROE into tax burden, interest burden, operating margin, asset turnover and leverage, showing exactly which part of the business moved returns.Video · 7 min15 min
8. 8. Integrated cases: a five-year scorecard, a peer comparison and a DuPont trendAn evaluation question gives you a summary table, expects you to compute a handful of ratios for the first and last year, and then asks which conclusion is valid: efficiency, profitability, liquidity and solvency each need their own ratio and their own direction.17 min
9. 9. Industry-specific ratios and forecastingEach industry has its own critical performance measures, and the results of ratio analysis, combined with judgment, feed forecasts that should cover a range of outcomes rather than a single number.11 min