Ratio Analysis Tutorial
AAA
  1. Ratio Analysis: Introduction
  2. Ratio Analysis: Finding The Data
  3. Ratio Analysis: Using Financial Ratios
Ratio Analysis: Introduction

Ratio Analysis: Introduction

Fundamental analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results.

Ratio analysis isn't just comparing different numbers from the balance sheet, income statement and cash flow statement. It's comparing the number against previous years, other companies, the industry or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and how it might perform in the future.

For example, current assets alone don't tell us a whole lot, but when we divide them by current liabilities we are able to determine whether the company has enough money to cover short-term debts.

In this tutorial, we'll show you how to use ratio analysis to analyze financial reports. Comparing these ratios against numbers from previous years, other companies, industry averages and the economy in general can tell you a lot about where a company might be headed. Valuing a company is no easy task. This tutorial will shed some light on how it can be done and, ultimately, help you to make more informed choices as an investor.

Ratio Analysis: Finding The Data

  1. Ratio Analysis: Introduction
  2. Ratio Analysis: Finding The Data
  3. Ratio Analysis: Using Financial Ratios
Ratio Analysis: Introduction
RELATED TERMS
  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  2. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  3. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
  4. Total Debt-to-Capitalization Ratio

    An indicator that measures the total amount of debt in a company’s ...
  5. Price-To-Cash-Flow Ratio

    The ratio of a stock’s price to its cash flow per share. The ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its ...
  1. What is the difference between an income statement and a balance sheet?

    Find the current value of a business by reading the balance statement and determine whether operations are efficient by analyzing ...
  2. What are the differences between gross profit and gross margin?

    Learn how gross profit and gross margin are calculated and how each is used in fundamental analysis. Generally, these numbers ...
  3. Does gross profit account for sales returns?

    Discover how accountants record the return of a saleable item and how that might impact the gross profit for a firm, either ...
  4. What are the differences between operating expenses and cost of goods sold (COGS)?

    Discover the differences between operating expenses and cost of goods sold, how each are calculated and why they are considered ...
comments powered by Disqus
Related Tutorials
  1. Industry Handbook
    Investing Basics

    Industry Handbook

  2. Discounted Cash Flow Analysis
    Fundamental Analysis

    Discounted Cash Flow Analysis

  3. Introduction to Stock Trader Types
    Active Trading Fundamentals

    Introduction to Stock Trader Types

  4. Guide to Pairs Trading
    Trading Strategies

    Guide to Pairs Trading

  5. Guide To Excel For Finance
    Fundamental Analysis

    Guide To Excel For Finance

Trading Center