Financial Ratio Analysis and Profitability

Name: Financial Ratio Analysis and Profitability
Author: Glenn Dickerson

Learn the fundamentals of financial ratio analysis and profitability ratios.

Preview the first lesson free — get full access to all 4 lessons.

Course: On-Demand

What do financial ratio analysis and profitability involve? In these lessons, you will learn what profitability ratios are and how they're used to help manage a business. We will explore how these ratios are used to evaluate the success of a business and its managers. We will also introduce the concept of sustainability and how it plays an important role in a company's profitability. Profitability ratios are tools used to track financial performance. Managers and investors calculate these ratios on a frequent basis, and these calculations are always presented along with the company's financial statement reports. Since businesses want to earn a profit and investors want a return on their investments, these ratios showcase how the company is performing and working to generate a profit. Profitability ratios are financial metrics that measure an organization's success in its pursuit of earnings. These ratios utilize information gathered from financial statements, revenues and expense analyses, balance sheets, income statements, and statements of the owner's equity. Profitability ratios demonstrate how well your company is being managed, using the profit it's generating as a framework. When compared to your competitors, a higher value in a given ratio lets you know that your company is performing well. These ratios are most useful when they're used to compare the company's performance to similar companies in the same industry, the company's historical performance, or against the benchmark data that's available for your industry. For owners or investors, profitability analysis that use these ratios allow them to evaluate how well the organization is doing. Strong ratios can attract new investors and help to sustain your business for the long run as they indicate that your company is being competently managed. When the ratios are weak, they can give you an idea on where to refocus your attention to make improvements and increase your organization's profit potential. Good or bad, ratios are helpful to the company decision-makers that need this information to help drive a profitable future.

Beginner Provider : Glenn Dickerson 4 Lessons · 12m in Arabic, German, English, Spanish, French, Portuguese, Chinese

Course Description

These lessons cover the fundamentals of financial ratio analysis and profitability. You will learn about sustainability, common size analysis, and the DuPont Analytical Framework.

What You'll Learn

Explore the fundamentals of financial ratio analysis and profitability
Identify the types of profitability ratio analysis
Discover what sustainability is and why it is important
Apply the uses of common size analysis
Use the DuPont Analytical Framework

Key Takeaways

The course covers the fundamentals of financial ratio analysis and profitability.
Profitability ratio analysis includes different types that the course identifies.
Sustainability is presented as an important concept covered alongside profitability.
Common size analysis has specific uses that the course explains.
The DuPont Analytical Framework is introduced as a method covered in the lessons.

Frequently Asked Questions

What topics does this course cover?

It covers the fundamentals of financial ratio analysis and profitability, including sustainability, common size analysis, and the DuPont Analytical Framework.

What will I learn about profitability in this course?

You will learn about profitability and sustainability and identify the types of profitability ratio analysis.

What lessons are included in this course?

The lessons are Intro to Financial Ratio Analysis and Profitability, Profitability and Sustainability, Common Size Analysis, and The DuPont Analytical Framework.

Does this course cover the DuPont analysis?

Yes, the course teaches the use of the DuPont analysis through the DuPont Analytical Framework lesson.