Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Introduction to Ratios

Financial Accounting

14. Financial Statement Analysis

Introduction to Ratios

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Financial ratios can be used to assess which of the following aspects of a firm's performance?

The firm's tax obligations exclusively

Only the firm's market share

The firm's compliance with government regulations

Liquidity, profitability, and solvency

Previous problemNext problem

Verified step by step guidance

Understand the concept of financial ratios: Financial ratios are tools used to evaluate various aspects of a firm's financial performance and position. They are derived from the firm's financial statements, such as the balance sheet, income statement, and cash flow statement.

Identify the key categories of financial ratios: Financial ratios are typically grouped into three main categories: liquidity, profitability, and solvency. Each category assesses a different aspect of the firm's performance.

Explain liquidity ratios: Liquidity ratios measure a firm's ability to meet its short-term obligations. Examples include the current ratio and quick ratio, which compare current assets to current liabilities.

Explain profitability ratios: Profitability ratios assess a firm's ability to generate earnings relative to its revenue, assets, or equity. Examples include the net profit margin, return on assets (ROA), and return on equity (ROE).

Explain solvency ratios: Solvency ratios evaluate a firm's ability to meet its long-term obligations and financial stability. Examples include the debt-to-equity ratio and interest coverage ratio.