Financial analysis is a crucial aspect of assessing a business’s financial health. It offers insights into performance and highlights potential vulnerabilities. In CFI’s ?Financial Analysis Fundamentals? course, we will compute and interpret ratios for three different companies, offering insights into their profitability, asset utilization, leverage, and liquidity. Subsequently, we will compare these companies, examining trends, benchmarking, and delving into the DuPont Pyramid.
Learning Objectives
• Determine a company
• s financial health by analyzing profitability, leverage, liquidity, and asset utilization through ratio, vertical, and horizontal analysis.
• Identifykey performance trends within a company
• s financial statements and benchmark them against industry peers.
• Recognize how tools such as the DuPont Pyramid provide deeper insights into return drivers and overall business performance.
Major Topics
• Calculate and interpret various return ratios, such as return on equity and return on assets.
• Conduct an in-depth vertical analysis of the income statement, including the calculation and interpretation of different profitability ratios.
• Assess a company
• s asset utilization efficiency including undertaking a detailed assessment of its work capital.
• Calculate and interpret a wide range of leverage and liquidity ratios.
• Conduct and present a comprehensive horizontal (trend) financial analysis.
• Compare a company
• s performance against that of its industry peers to gain valuable insights.
