From the course: Excel: Management Accounting
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Uses of ratio analysis - Microsoft Excel Tutorial
From the course: Excel: Management Accounting
Uses of ratio analysis
- [Instructor] How do major companies keep an eye on the internal workings of the business given they often have thousands of employees and customers? The answer is through specialized financial reporting tools, like ratio analysis. In this video we'll learn what ratio analysis is and the different categories of ratios that a firm keeps track of. Ratio analysis is really all about the use of relationships among financial statement accounts to gauge the financial condition and performance of a company. What that means is essentially we're taking line items from accounting reports and then we're combining them to say something new and interesting. We typically classify ratios based on the type of information they provide. There's four types of ratios out there. The first are Activity Ratios. Activity Ratios tell us how effectively the company is putting it's assets to use. In particular this is going to include internal information about the firm and whether it's doing a good job in…
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