Ratio Analysis for Financial Health

This video covers the following learning objectives:

• Define and categorize financial ratios into profitability, liquidity, and solvency.
• Link financial ratios to specific line items from the income statement and balance sheet.
• Calculate key profitability ratios in Excel, including:
  • Gross Margin
  • Operating Margin
  • Net Margin
  • Return on Assets (ROA)
  • Return on Equity (ROE)
• Calculate key liquidity ratios in Excel, including:
  • Current Ratio
  • Quick Ratio
  • Cash Ratio
• Calculate key solvency ratios in Excel, including:
  • Debt-to-Equity
  • Interest Coverage
  • Debt Ratio
• Use Excel cell referencing and formulas to dynamically update ratios based on financial statement data.
• Apply basic Excel formatting and conditional formatting for data visualization and alert flags.
• Interpret ratio trends over multiple years and assess financial health using benchmark analysis and common thresholds.
• Construct a ratio analysis dashboard with spark-lines and colour coding to support financial decision-making and trend analysis.
• Identify signals of operational efficiency, liquidity risk, and financial leverage from ratio outputs.
• Apply ratio analysis outputs as a foundation for forecasting and valuation in later modules.