Click on this pin from Investopedia:
http://www.pinterest.com/pin/237213105347333013/
This pin will lead you to my “Financial Ratio” Pinterest Board
Where you will find this tutorial:
http://www.pinterest.com/pin/237213105347333010/
It explains every ratio that we have discussed in this class.
Watch this video for review:
http://www.investopedia.com/video/play/understanding-fundamental-analysis/
“Fundamental analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results. Ratio analysis isn’t just comparing different numbers from the balance sheet, income statement and cash flow statement. It’s comparing the number against previous years, other companies, the industry or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and how it might perform in the future.For example, current assets alone don’t tell us a whole lot, but when we divide them by current liabilities we are able to determine whether the company has enough money to cover short-term debts.
Comparing these ratios against numbers from previous years, other companies, industry averages and the economy in general can tell you a lot about where a company might be headed. Valuing a company is no easy task. This tutorial will shed some light on how it can be done and, ultimately, help you to make more informed choices as an investor.
There is a lot to be said for valuing a company, it is no easy task. If you have yet to discover this goldmine, the satisfaction one gets from tearing apart a companies financial statements and analyzing it on a whole different level is great – especially if you make or save yourself money for your efforts.
Here is a list of 19 basic fundamental analysis ratios to help you get started. You have these formulas in your textbook.
The Ratios:
Performance Activity
Book Value Per Common Share Asset Turnover
Cash Return On Assets Average Collection Period
Vertical Analysis Inventory Turnover
Dividend Payout Ratio Financing
Earnings Per Share Debt Ratio
Gross Profit Margin Debt / Equity Ratio
Price/Earnings Ratio Liquidity Warnings
Profit Margin Acid-Test Ratio
Return on Assets Interest Coverage
Return on Equity Working Capital
Taken directly from the www.Investopedia.com website
