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

Before we delve into the different ratios and how they work, let's briefly discuss where you can find the data for each ratio.

The first step in ratio analysis is to find the data. For the 19 ratios we will be taking you through we will be using a fictitious company, Cory's Tequila Co. All the data for these examples will be provided, but when you decide to do this on your own there are several different areas where you can find the latest financial figures for a particular company. Finding financial reports is easier than ever thanks to the Internet, here are some sources:

  • Company Websites - Almost every public company has a website or investor relations department. For the most current quarterly or annual report you might want to check in these places first. Walt Disney is an excellent example of a company that uses the web to get information out to shareholders and prospective investors. It takes no time at all to find their investor relations section.
  • Securities and Exchange Commission (SEC) - The information posted in the electronic gathering, analysis and retrieval (EDGAR) database includes the annual report (known as the 10-K), quarterly report (10-Q), and a myriad of other forms that contain every type of financial data.
  • Yahoo! Finance - A touchstone for many individual investors, Yahoo! Finance is a great resource for financial news, and lays out ratios and performance data for individual companies.
  • Hoovers.com - A great site for company analysis; some of the data requires a subscription.

These are by no means the only places to find the financial statements, there are countless free and pay sites out there offering similar features. Now let's move onto the meat of this tutorial: the ratios.

Ratio Analysis: Using Financial Ratios

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