🔴 3 Minutes! Financial Ratios & Financial Ratio Analysis Explained & Financial Statement Analysis

00:02:55
https://www.youtube.com/watch?v=TZZFBkbC2lA

Résumé

TLDRThis video efficiently covers the basics of financial ratio analysis within a short span, emphasizing the necessity of numerical evaluation for assessing a company's health. It introduces the audience to three significant types of ratios: Liquidity Ratios for debt payment capabilities, Profitability Ratios for measuring profit compared to sales, and Leverage Ratios for understanding debt usage. Each type is illustrated with examples like the Current Ratio for liquidity, Profit Margin Ratio for profitability, and Debt Ratio for leverage. The video also acknowledges that this overview is simplistic and encourages viewers to learn more about various financial ratios and their applications through additional resources.

A retenir

  • 📈 Financial ratios are crucial for assessing company health.
  • 💧 Liquidity Ratios show a company's ability to meet short-term debt.
  • 💰 Profitability Ratios indicate a company's profit-making efficiency.
  • 📉 Leverage Ratios reveal the extent of a company's debt usage.
  • 📊 Current Ratio measures assets available for imminent debt payments.
  • 🔍 Profit Margin Ratio links profit levels to sales figures.
  • 🏦 A lower Debt Ratio signifies a safer financial stance.
  • 📝 There are many other financial ratios with various applications.
  • ⚠️ Be mindful of the limitations of financial ratios in assessments.
  • 🎥 Check out MBAbullshit.com for deeper insights into financial ratios.

Chronologie

  • 00:00:00 - 00:02:55

    The video introduces the concept of financial ratio analysis as a method to assess a company's health through quantifiable metrics. It emphasizes the importance of comparing these metrics across different companies to gain insights into their financial status.

Carte mentale

Vidéo Q&R

  • What are financial ratios?

    Financial ratios are numerical values used to assess and compare a company's health.

  • What are the main types of financial ratios?

    The main types are Liquidity Ratios, Profitability Ratios, and Leverage Ratios.

  • What does the Current Ratio indicate?

    The Current Ratio indicates how easily a company can pay its debts within the next 12 months.

  • What does the Profit Margin Ratio measure?

    The Profit Margin Ratio measures how much profit a company earns relative to its sales.

  • What does the Debt Ratio show?

    The Debt Ratio shows what percentage of a company's assets are financed by debt.

  • Why is it important to analyze financial ratios?

    Analyzing financial ratios helps assess a company's financial health and make comparisons with other companies.

  • Are there disadvantages to using financial ratios?

    Yes, there are various limitations and issues with using financial ratios.

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  • 00:00:04
    Financial Ratio Analysis Explained in 3 minutes Sometimes it's not enough to simply say a
  • 00:00:12
    company is in "good or bad" health...
  • 00:00:15
    To make it easier to compare a company's health with other companies, we have to put numbers
  • 00:00:20
    on this health, so that we can compare these numbers with the numbers of other companies...
  • 00:00:28
    So now... how do we use numbers to assess company health?
  • 00:00:33
    This is where Financial Ratios come in...
  • 00:00:37
    Very common types of financial ratios are Liquidity Ratios, Profitability Ratios, and
  • 00:00:43
    Leverage Ratios.
  • 00:00:46
    Liquidity Ratios can tell us how easily a company can pay its debts... so that the company
  • 00:00:52
    doesn't get eaten up by banks or other creditors.
  • 00:00:57
    An example of this is the Current Ratio...
  • 00:01:02
    This tells us how much of your company's stuff can be easily changed into cash within the
  • 00:01:07
    next 12 months so that it can pay debts which need to be paid also within 12 months.
  • 00:01:15
    The higher your current ratio is, the less risky a situation your company is in.
  • 00:01:24
    Now moving on...
  • 00:01:26
    Profitability Ratios can tell us how good a company is at making money.
  • 00:01:32
    An example of this is the Profit Margin Ratio.
  • 00:01:37
    This tells us how much profit your company earns compared to your company's sales.
  • 00:01:44
    Normally, a higher number is better; because you want to earn more profit for every $1
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    of sales that you get.
  • 00:01:53
    And finally, what about Leverage Ratios?
  • 00:01:57
    These can tell us how much debt the company is using to make the company run and stay
  • 00:02:02
    alive.
  • 00:02:04
    An example of this is the simple Debt Ratio.
  • 00:02:09
    This tells us how much % of a company's assets are paid for by debt.
  • 00:02:15
    Normally, a company is considered "safer" when the debt ratio is low.
  • 00:02:22
    Note that this was just a very simple overview.
  • 00:02:25
    There are a lot more financial ratios & many different ways of using them; plus a lot of
  • 00:02:31
    problems and disadvantages in using them as well.
  • 00:02:36
    Would you like to SUPER easily learn more about many financial ratios with even deeper
  • 00:02:42
    analysis & detail?
  • 00:02:44
    Check out my FREE videos at MBAbullshit.com See ya there!
Tags
  • Financial Ratios
  • Liquidity Ratios
  • Profitability Ratios
  • Leverage Ratios
  • Current Ratio
  • Profit Margin Ratio
  • Debt Ratio
  • Company Health
  • Financial Analysis
  • MBAbullshit.com