Ratio Analysis for Lenders and Financial Merchants Course

Accounting information is provided by means of financial statements, which includes:The income statement and the Balance Sheet but are often in summarized form. The secrets about the performance, results and health of a business are hidden in the financial statements. To benefit and as well enable the users make well – informed decisions, financial statements need to be analyzed by means of ratios. The two primary objectives of every business are profitability and solvency.

Profitability is the ability of a business to make profit, while solvency is the ability of a business to pay debts as they come due and remain in business. Ratios are the tools of analyzing financial statements, hence this course. Developed with hands on deck practical and worked examples for each ratio, the course is highly recommended.

Learning Objectives

At the end of this course, you will be able to:

• Determine liquidity or Short-term solvency and Long-term solvency.
• Assess the operating efficiency of businesses
• Analyze the profitability of businesses
• Engage in comparative analysis, i.e. inter-firm and intra-firm comparisons.
• Identify the health status of businesses and organizations
• Select financial instruments capable of yielding profits in a short term hold

Course Contents

DAY 1

• Financial Statements
• Purpose
• Tools for financial analysis
• Key users of ratios
• Ratios
• Grouping of financial ratios
• Market value ratios
• Some market value ratios:
• Dividend payout ratio with worked Example
• Current Dividend yield with worked Example
• Earnings per share (EPS) with worked Example
• Enterprise value (EV) with worked Example
• Market to book ratio with worked Example
• Price to earnings ratio (P/E ratio) with worked Example
• Market capitalization (Market cap) with worked Example
• Market to debt ratio with worked Example
• Market value added (MVA) with worked Example
• Market value of equity with worked Example
• Post-money valuation with worked Example
• Price to sale ratio with worked Example

DAY 2

• Liquidity Ratios
• Acid test (Quick ratio) with worked Example
• Cash conversion cycle (CCC) with worked Example
• Cash ratio with worked Example
• Current ratio with worked Example
• Operating cash flow (OCF) with worked Example
• Working capital ratio with worked Example
• Performance ratios
• Average collection period with worked Example
• Fixed assets turnover with worked Example
• Gross profit margin with worked Example
• Inventory turnover with worked Example
• Receivable turnover with worked Example
• Total assets turnover with worked Example
• Days in inventory (Days inventory outstanding) with worked Example
• Days payable (Payable period) with worked Example
• Days sales in cash with worked Example
• Days sales outstanding (DSO) with worked Example

DAY 3

• Earnings before interest, taxes, depreciation and amortization with worked Example
• EBIT with worked Example
• Economic value added (EVA) with worked Example
• Net operating profit after taxes (NOPAT) with worked Example
• Net operating working capital (NOWC) with worked Example
• Revenue per employee with worked Example
• Cash flow ratios
• Cash flow to debt ratio with worked Example
• Dividend payout ratio with worked Example
• Free cash flow (FCF) with worked Example
• Profitability ratios
• Basic earning power (BEP) with worked Example
• Breakeven point with worked Example
• Contribution margin with worked Example
• Current yield (dividend yield) with worked Example
• Profit margin with worked Example
• Return on assets (ROA) with worked Example

DAY 4

• Return on net assets (RONA) with worked Example
• Return on capital (ROC) with worked Example
• Return on equity (ROE) with worked Example
• Return on investment (ROI) with worked Example
• Return on sales (ROS) with worked Example
• DuPont ratio with worked Example
• Effective tax rate with worked Example
• Debt ratios
• Capitalization ratio with worked Example
• Debt ratios with worked Example
• Asset to equity with worked Example
• Asset turnover with worked Example
• Cash flow to debt ratio with worked Example
• Debt ratio with worked Example
• Debt to equity with worked Example
• Equity multiplier with worked Example
• Interest coverage with worked Example

DAY 5

• EBITDA to interest coverage with worked Example
• Gearing with worked Example
• Leverage with worked Example
• Sustainable growth rate (SGR) with worked Example
• Times interest earned (TIE) with worked Example
• Additional Relevant Ratios
• Altman’s Z-Score with worked Example
• Audit ratio with worked Example
• Contribution margin with worked Example
• Contribution margin ratio with worked Example
• Cost of capital (Weighted average cost of
  capital or WACC) with worked Example
• Exercise value for Stock (shares) with worked Example
• Rule of 72 with worked Example

Course Booking

Please use the “book now” or “inquire” buttons on this page to either book your space or make further enquiries.