When it comes to investing, analyzing financial statement information (also known
as quantitative analysis), is one of, if not the most important element in the fundamental
analysis process. At the same time, the massive amount of numbers in a company's
financial statements can be bewildering and intimidating to many investors. However,
through financial ratio analysis, you will be able to work with these numbers in
an organized fashion.
The objective of this tutorial is to provide you with a guide to sources of financial
statement data, to highlight and define the most relevant ratios, to show you how
to compute them and to explain their meaning as investment evaluators.
In this regard, we draw your attention to the complete set of financials for Zimmer
Holdings, Inc. (ZMH), a publicly listed company on the NYSE that designs, manufactures
and markets orthopedic and related surgical products, and fracture-management devices
worldwide. We've provided these statements in order to be able to make specific
reference to the account captions and numbers in Zimmer's financials in order to
illustrate how to compute all the ratios.
Among the dozens of financial ratios available, we've chosen 30 measurements that
are the most relevant to the investing process and organized them into six main
categories as per the following list:
