Corporate Finance #2 Financial Ratios
Gain Financial Insights and Make Informed Decisions with Ratio Analysis in Corporate Finance
What you'll learn
- Define the concept of ratio analysis and explain its significance in corporate finance decision-making.
- Apply the DuPont System of analysis to evaluate financial performance and assess the key drivers of profitability.
- Calculate and interpret the return on investment (ROI) in various scenarios, demonstrating proficiency in evaluating investment profitability.
- Analyze and interpret key ratios such as return on assets, total asset turnover, and profit margin to assess operational efficiency and financial performance.
- Evaluate the financial health and risk profile of an organization using the return on equity and debt-to-equity ratios.
- Calculate and interpret the accounts receivable collection period to assess the effectiveness of credit and collection policies.
- Assess the organization's ability to meet its interest obligations using the times interest earned and fixed charge coverage ratios.
- Conduct trend analysis of return on equity to identify patterns and trends in financial performance.
- Utilize ratio analysis to compare and evaluate the performance of different divisions within an organization.
- Construct a projected income statement and balance sheet using ratio analysis techniques to forecast future performance.
