Running a Profitable Business: Understanding Financial Ratios – Jim Stice & Kay Stice

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Financial ratios—such as ROI (return on investment) or ROA (return on assets}— are a valuable tool for measuring a company’s progress against a financial goal, a certain competitor, or the overall industry. In this course, professors Jim and Kay Stice explain the financial ratios found on balance sheets, income statements, and cash-flow statements and provide examples from real-world companies such as Walmart, Nordstrom, and McDonald’s. They help you understand howto use financial ratios to analyze or benchmark your company against other companies.

Topics include:

• Identify the financial statement where you can find the source of financing for a company to buy assets.
• Name the category that liabilities must be paid from.
• Explain what you want to see when you look at a company’s operating income percentage.
• List the steps to calculate accounts receivable turnover.
• Identify the two components to use when calculating current ratio.
• Recall the pitfall you need to avoid when performing financial ratio analysis.