Explains what financial ratios such as ROA and ROI mean and how they can be used to identify financial trends or assess a company's financial status.
- Hi, I'm Jim Stice. I'm a Professor of Accounting at Brigham Young University. This is my brother Kay. - I'm also a Professor of Accounting at Brigham Young University. We are an accounting family. - Absolutely, we love numbers. We love financial statements, and we love using financial reports to gain insights to the how companies work. - This course introduces you to methods of financial ratio analysis that allow you to use a company's financial reports to identify the company's strengths and weaknesses. - You can use a company's financial reports to identify areas for improvement as well as to identify areas of risk.
- Before taking this course you might consider taking our Accounting Fundamentals course. That course introduces you to the major areas of accounting. - But with that said, we have designed this financial ratio analysis course to be self-contained, and we carefully explain any accounting terminology that we use. - In short, this is an introductory course with no prior accounting knowledge necessary. - So, what can you learn using financial ratio analysis? Well, you can learn how much Walmart marks up its items that it sells you.
- In other words, when Walmart sells you an item for ten dollars, how much did Walmart have to pay to buy that item? - You can also learn how many days on average items hang on the racks and sit on the shelves at Nordstrom before they're sold. The answer is about 60 days. - You can learn the same thing about the food at McDonald's. Hopefully, the answer is substantially less than 60 days. - Financial ratio analysis is the process of using the relationships among a company's financial numbers to gain insights into that company's operations. - Let's go!
- What are financial statements?
- Understanding the DuPont framework
- Working with common-size financial statements
- Reviewing profitability, efficiency, and leverage ratios
- Analyzing potential-pitfall ratio