- CFA Level 2: Financial Reporting Part 3 – Introduction
- Various Definitions of Earnings
- Total Comprehensive Income
- Earnings and Cash Flows
- Derivatives Hedging and Financial Reporting
- Cash Basis Accounting vs. Accrual Basis Accounting
- Management Motivations for Financial Statement Manipulation
- Measures of Earnings Quality
- Analyzing Earnings Quality - the Accruals Ratio
- Financial Reporting Problems and Warning Signs
- Financial Statement Analysis - Ratio Analysis
- Adjusting a Company's Reported Financial Statements
Financial Statement Analysis - Ratio Analysis
Financial analysts commonly use financial ratios to evaluate the investment worthiness of a company’s equity or debt. Ratio analysis is commonly done in comparison to other companies of similar industry.
When analyzing financial ratios, the analyst should consider the values in the context of the business cycle, trends, and industry or competitor standards.
5 Ratio Categories
Activity ratios measure the efficiency in which management runs the company.
Measure the company’s capacity to meet its short-term financial commitments.
Liquidity Ratio Examples: quick ratio (also called acid test ratio), cash ratio, defensive interval ratio, and cash conversion cycle.
This content is for paid members only.
Join our membership for lifelong unlimited access to all our data science learning content and resources.