Intro to Business › Section N · Financial information and accounting › Topic N.6
Analyzing financial statements with ratios
A balance sheet total of a quarter of a million dollars means little on its own. Ratios turn the statements into comparisons that reveal whether a firm can pay its bills, how profitable it is, how fast it sells its stock, and how heavily it leans on borrowing.
In this topic
- Why ratios
- Four families of ratios
- Liquidity ratios
- Worked example: Kestrel's liquidity
- Profitability ratios
- Activity and debt ratios
- Worked example: Kestrel's other ratios
- Benchmarks give ratios meaning
- What ratios cannot tell you
- Common mistakes to avoid
- Key takeaways
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