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

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Multiple Choice

The ratios that are based on financial statement values and used for comparison purposes are called:

Market ratios

Operational ratios

Financial ratios

Productivity ratios

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Verified step by step guidance

Understand the concept of financial ratios: Financial ratios are metrics derived from financial statement values, such as the balance sheet, income statement, and cash flow statement, to evaluate a company's performance, financial health, and efficiency.

Recognize the purpose of financial ratios: These ratios are used for comparison purposes, either across different companies in the same industry or over time within the same company, to assess trends and benchmarks.

Differentiate financial ratios from other types of ratios: Financial ratios focus specifically on financial data, unlike market ratios (which assess stock performance), operational ratios (which evaluate operational efficiency), or productivity ratios (which measure output relative to input).

Identify common categories of financial ratios: Examples include liquidity ratios (e.g., current ratio), profitability ratios (e.g., net profit margin), solvency ratios (e.g., debt-to-equity ratio), and efficiency ratios (e.g., inventory turnover).

Apply financial ratios in analysis: Use these ratios to interpret financial statements, compare performance, and make informed decisions about investments, creditworthiness, or operational improvements.