Financial statement analysis

    Profitability, liquidity, solvency, efficiency, and market ratios.

    7 guides. Read in order, or jump to what you need.

    Concept Guide

    Profitability ratios

    Margin and return ratios explained: gross, EBITDA, EBIT and PAT margins, ROE, ROA, ROCE, ROIC and EVA, and how leverage can inflate ROE.

    9 min readRead more
    Concept Guide

    Liquidity ratios

    Can a company pay its bills? The current, quick and cash ratios, interest coverage, undrawn credit lines and commercial paper rollover risk in India.

    6 min readRead more
    Concept Guide

    Solvency ratios

    Can a company survive the long run? Net debt to EBITDA, debt to equity, interest coverage, DSCR, the Altman Z-score and covenant headroom.

    7 min readRead more
    Concept Guide

    Efficiency ratios

    How productively a company uses its assets: asset turnover, the cash conversion cycle with DIO, DSO and DPO, and why year-end balances can mislead.

    7 min readRead more
    Concept Guide

    Market ratios

    What investors pay for earnings, book value and cash: P/E, EV/EBITDA, P/B, dividend yield, EPS and CAPE, and how to compute enterprise value.

    7 min readRead more
    Concept Guide

    DuPont decomposition

    How DuPont analysis splits ROE into margin, asset turnover and leverage, in three- and five-factor forms, to show whether a high ROE can last.

    8 min readRead more
    Course

    Fundamental analysis: the complete course

    The original fundamental analysis course: approaches, qualitative factors, the three statements, ratio categories, sector checks, red flags, and valuation models.

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