Basics of Financial Ratios Analysis

This set of flashcards covers key concepts related to financial ratios, their analysis, and related financial statements.

Financial Ratio Analysis

A quantitative analysis that compares financial data to help assess an organization's performance.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, ultimately translating into net income.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Statement of Cash Flows

A financial statement that provides a summary of cash inflows and outflows from operating, investing, and financing activities.

Gross Profit Margin

A profitability ratio that calculates the percentage of revenues that exceed the cost of goods sold (COGS).

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets.

Quick Ratio

A more stringent liquidity ratio that measures a company's ability to meet its short-term liabilities using its most liquid assets.

Debt to Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Earnings Before Interest and Taxes (EBIT)

A measure of a firm's profit that includes all expenses except interest and income tax expenses.

Cash Conversion Cycle (CCC)

A metric that shows the time taken by a company to convert its investments in inventory and other resources into cash flows from sales.