FINANCIAL RATIOS: How to Analyze Financial Statements

In this short tutorial you'll learn how Financial Ratio Analysis works. We'll break Financial Ratios down into their five main groups:

▪ Profitability Ratios
▪ Liquidity Ratios
▪ Efficiency Ratios
▪ Leverage Ratios
▪ Price Ratios

Then I'll show you how to calculate 25 of the most popular Financial Ratios using the Income Statement and the Balance Sheet. Afterwards, you can jump into my Financial Ratios Playlist to explore each ratio in more detail.

⏱️TIMESTAMPS
00:00 - Intro
00:28 - FINANCIAL STATEMENTS
01:16 - WHAT IS FINANCIAL RATIO ANALYSIS?
01:56 - What types of Financial Ratio are there?
02:39 - PROFITABILITY RATIOS
03:47 - Gross Profit Margin (GPM)
04:19 - Operating Profit Margin (OPM)
04:40 - Net Profit Margin (NPM)
05:46 - Return on Assets (ROA)
06:49 - Return on Equity (ROE)
07:37 - Return on Capital Employed (ROCE)
08:11 - LIQUIDITY RATIOS
09:10 - Cash Ratio
09:50 - Quick Ratio
10:17 - Current Ratio
10:29 - EFFICIENCY RATIOS
11:04 - Inventory Turnover Ratio
11:26 - Receivables Turnover Ratio
11:43 - Asset Turnover Ratio
12:16 - Payables Turnover Ratio
12:40 - Cash Conversion Cycle
13:09 - Days Sales of Inventory
13:43 - Days Sales Outstanding
14:07 - Days Payable Outstanding
14:52 - LEVERAGE RATIOS
15:19 - Debt to Assets Ratio (DTA)
15:43 - Debt to Equity Ratio (DTE)
16:39 - Interest Coverage Ratio
17:03 - Debt Service Coverage Ratio (DSCR)
17:56 - PRICE RATIOS
18:26 - Earnings Per Share (EPS)
19:27 - Price-To-Earnings Ratio (P/E Ratio)
20:19 - Price/Earnings-To-Growth Ratio (PEG Ratio)
21:17 - Dividends Per Share (DPS)
22:04 - Dividend Yield Ratio
22:30 - Dividend Payout Ratio
22:59 - FINANCIAL RATIOS MIND MAP

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DISCLAIMER

Some of the links above are affiliate links, where I earn a small commission if you click on the link and purchase an item. You are not obligated to do so, but it does help fund these videos in hopes of bringing value to you!
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#accounting #financialratios #accountingstuff

[ibrahimalbaz]

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[amandakarl]

I hope you know you are basically my accounting 101 professor. My TESU professor just links all your videos in our class materials and it's up to your videos and the book to learn everything. You are doing amazing work and helping me so much!

[TuneActive]

Words cannot express how grateful I am for your course, thank you James

[MeghanSandbeck]

Your videos are the reason I am passing my Introduction to Financial Accounting course.
I have realized that I learn best by understanding the big picture, and THEN learning the steps which is not the way my textbooks are written, but it is the way you explain the concepts. You're the hero all of us accounting students didn't know we needed. Thank you!

[angelnicoleorias]

thank you so much for this video! i have to memorize around 40 ratios for our midterm exams, and this video helped me tick 26 of them! i love how you grouped the ratios, which made memorizing the formulas a loooot easier, explained what these formulas stand for, their relevance. so happy i came by this vid. it helped me a lot! i've also been sending my classmates this video!

[mohamedgamal]

What a great video !! I needed this video since long time and I really wanted to learn this ratios from you .. you got your special way to learn others .. you are really talented ... thanks alot ❤️
I hope you start your costing and budgeting videos that would be great 👌🏻

[monah]

James! You won’t believe how happy I am to see you ! I had a terrible day and you changed my mood a lot ! Please, please visit us more often! You are amazing 😀 excellent lessons as always.

[sohailmallick]

This is the most comprehensive, complete and concise video available on financial is my go-to video any time I want to revise my concepts.

[camillaszymanowska]

These videos are so helpful. Would love some more on gearing and gearing ratios!

[ernieaguilera]

Brilliant and Beautiful Financial Control Systems. Thanks for posting!

[ChhumSoklin-pkqy]

I really love your explanation. Your video is amazing. It makes me understand and memorize the lesson quickly. Hope to see your new video soon.

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[theguywith]

Really immaculate with your statements. True to the way of accounting stuff. I have to catch up on quite a few videos now!

[bronnies]

2 years off as an accountant and your videos help me refresh my memory, thank you so much james

[KeshawKSinha]

the way explain is awesome. Even many big shot professors are not able to make simplify as you do.

[youtubecommentrater]

You are needed...this video was needed champ! We might not deserve you but Thank You my boy 💎

[archanak]

Hi James, I recently came across your channel and loved your videos!! Big thank you for making them. Would you please make some videos explaining basic mobth end processes and secondary balance accounting such as BS reclass, funding, cost of carry etc??
Thanks.

[MrPushupp]

wow wow wow this video was packed full of it, just got done making falsh cards of these all so i can lopok at them on the go and such. Thanks for the video!

[asfandyar]

This is by far the best video on financial ratios I have EVER seen.

Splendid work👏👏👏

[Uddhav]

Great videos and has helped me (a non finance guy) understand the concepts much better now. Is it possible for you to share some references or sources too in description that will help us further?