Financial Statement Analysis: Fundamental Ratio Analysis from edX

Rice University’s online business courses provide a convenient, yet interactive and hands-on, way to learn or brush up on the practical skills needed to analyze corporate financial statements.

Taught by an industry professional from Rice Business, learners will explore the financial analysis journey, from extracting firm specific financial information to conducting an advanced DuPont analysis. Through a combination of engaging lectures, practical case studies, and hands-on exercises, students will gain invaluable insights into the principles and best practices that will allow them to confidently examine firm financial information and use it to analyze the firm’s position and performance.

Recommendation: As a next step in building your financial statement analysis skills, we recommend completing the second course in this series, Financial Statement Analysis – Company Forecasting and Valuation, after completing Fundamental Ratio Analysis.

What's inside

Learning objectives

You will be able to:
Apply your knowledge of financial accounting to real-world scenarios, reinforcing your understanding of key concepts and practices.
Analyze and effectively evaluate financial information by identifying reliable sources and applying appropriate analytical techniques.

Interpret segment disclosures and utilize the provided information to inform decision-making and financial analysis.
Perform both basic and advanced ratio analysis to assess a company’s financial health, drawing conclusions based on quantitative data.

You will be able to:
Apply your knowledge of financial accounting to real-world scenarios, reinforcing your understanding of key concepts and practices.
Analyze and effectively evaluate financial information by identifying reliable sources and applying appropriate analytical techniques.
Interpret segment disclosures and utilize the provided information to inform decision-making and financial analysis.
Perform both basic and advanced ratio analysis to assess a company’s financial health, drawing conclusions based on quantitative data.

Traffic lights

Read about what's good

what should give you pause

and possible dealbreakers

Explores financial analysis, from extracting firm-specific financial information to conducting an advanced DuPont analysis, which are essential skills for finance professionals

Taught by an industry professional from Rice Business, which may provide learners with insights into real-world applications of financial statement analysis

Recommends completing the second course in this series, Financial Statement Analysis – Company Forecasting and Valuation, after completing Fundamental Ratio Analysis

Applies knowledge of financial accounting to real-world scenarios, reinforcing understanding of key concepts and practices, which is useful for both academic and professional settings

Performs both basic and advanced ratio analysis to assess a company’s financial health, drawing conclusions based on quantitative data, which is a core skill for financial analysts

Reviews summary

Fundamental financial statement ratio analysis

According to learners, this course provides a strong foundation in financial ratio analysis, particularly focusing on fundamental techniques. Students appreciated the practical, hands-on approach through case studies and exercises that help apply theoretical concepts. The instructor's clarity and expertise were frequently highlighted as a major strength, making complex topics understandable. Some found the pace well-suited for beginners, though more experienced learners might find parts basic. The course is seen as a solid starting point for understanding company financial health, often recommending the subsequent course for forecasting and valuation.

Intended as the first course in a series.

"This is the first course in a series, highly recommend the next one."

"A good starting point, but needs the follow-up course for more depth."

"This course is a good entry, looking forward to the next part."

"Understand that this is foundational and subsequent courses build on it."

Pace is good, especially for new learners.

"The course is well-paced and easy to understand for beginners."

"A good introduction for those new to financial analysis."

"The pace is appropriate for someone starting out."

"Good for building initial understanding."

Instructor explains complex topics clearly.

"Instructor clearly explains difficult concepts."

"Professor was knowledgeable and easy to follow."

"His explanations were very clear and concise."

"The instructor made the material very accessible."

Focuses on real-world use with exercises.

"The lectures and practical exercises helped solidify my understanding."

"Learned practical skills to analyze corporate financial statements."

"The hands-on activities were very useful for applying the concepts."

"I found the case studies particularly helpful for real-world context."

Provides a solid base in ratio analysis.

"This course is great to have a solid foundation on Financial Statement Analysis with ratio."

"Excellent course for understanding fundamental ratio analysis."

"It provides a solid foundation for understanding financial statements and ratios."

"Gave me a good foundation in understanding financial ratios."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Financial Statement Analysis: Fundamental Ratio Analysis with these activities:

Review Accounting Principles

Show steps

Solidify your understanding of basic accounting principles to better grasp financial statement analysis.

Show steps

Review key accounting equations and principles.
Practice applying these principles to sample transactions.

Review 'Financial Accounting' by Libby, Libby, and Hodge

Show steps

Reinforce your understanding of accounting principles with a comprehensive textbook.

View Fundamentals of Financial Accounting on Amazon

Show steps

Read the chapters on the balance sheet and income statement.
Work through the example problems in the book.

Calculate Financial Ratios from Sample Statements

Show steps

Practice calculating key financial ratios to improve speed and accuracy.

Show steps

Find sample financial statements online.
Calculate liquidity, solvency, and profitability ratios.
Compare your results to industry averages.

Four other activities

Expand to see all activities and additional details

Show all seven activities

Create a Ratio Analysis Cheat Sheet

Show steps

Summarize key financial ratios and their interpretations for quick reference.

Show steps

List the formulas for common financial ratios.
Describe what each ratio measures.
Explain how to interpret the ratio's value.

Analyze the Financial Statements of a Public Company

Show steps

Apply ratio analysis techniques to a real-world company to assess its financial health.

Show steps

Choose a publicly traded company.
Download its financial statements from the SEC website.
Calculate key financial ratios.
Interpret the ratios and write a brief report.

Review 'The Interpretation of Financial Statements' by Benjamin Graham

Show steps

Gain insights from a classic text on financial statement interpretation.

View The Intelligent Investor, 3rd Ed.: The... on Amazon

Show steps

Read the chapters on balance sheet and income statement analysis.
Focus on Graham's principles of value investing.

Present a Financial Ratio Analysis Report

Show steps

Create a presentation summarizing your financial ratio analysis findings.

Show steps

Prepare slides summarizing key ratios and trends.
Explain the implications of your findings.
Practice your presentation.

Career center

Learners who complete Financial Statement Analysis: Fundamental Ratio Analysis will develop knowledge and skills that may be useful to these careers:

Financial Analyst

A Financial Analyst examines financial data to provide insights and recommendations that can inform a company's financial decisions. This role involves using financial statements to assess a company's performance and position. This course helps build a foundation for understanding various financial analysis techniques, including ratio analysis, which is a core component of a Financial Analyst's work. By learning how to extract financial information and perform advanced DuPont analysis, you'll gain a practical understanding of how to evaluate a company's financial health and interpret segment disclosures, all of which prepare you for the kind of work a Financial Analyst performs.

See salaries and explore the career path for Financial Analyst

Investment Analyst

The role of an Investment Analyst is to evaluate investment opportunities, assess risk, and make recommendations that align with investment strategies. This often requires using financial statements to assess the health and prospects of companies. This course may be particularly useful for developing the skills needed to analyze financial information, including performing advanced ratio analysis and interpreting segment disclosures. The course will help you make informed decisions about potential opportunities that are often a part of an Investment Analyst's duties. By mastering these techniques, you'll be prepared to examine firm financial statements which is useful for this role.

See salaries and explore the career path for Investment Analyst

Equity Research Analyst

An Equity Research Analyst studies publicly traded companies, analyzing their financial performance and outlook to make buy, sell, or hold recommendations to investors. This role involves a significant amount of analysis of financial statements. This course helps to understand how to extract financial information, perform ratio analysis, and interpret segment disclosures, which are all crucial parts of an Equity Research Analyst's tasks. The course's focus on real-world cases helps build the practical expertise that is often required in this field, which can help you confidently examine firm financial information.

See salaries and explore the career path for Equity Research Analyst

Credit Analyst

A Credit Analyst assesses the creditworthiness of individuals, businesses, or other entities to make lending decisions and determine the appropriate terms and conditions for loans. This involves careful examination of financial statements to understand financial health before making credit decisions, and this course provides a strong foundation for that work. This course may be helpful to gain expertise in extracting firm-specific financial information and conducting both basic and advanced ratio analyses. You can use this to improve your understanding of how to assess a company’s financial health, which is what a Credit Analyst must do regularly.

See salaries and explore the career path for Credit Analyst

Portfolio Manager

A Portfolio Manager constructs and manages a portfolio of investments on behalf of clients or a fund. This role requires a deep understanding of financial analysis and the ability to interpret company financial statements. A Portfolio Manager needs to understand how to examine firm financial information, and this course helps build those skills by teaching you how to extract financial information, perform ratio analysis, and interpret segment disclosures. The focus on practical case studies in this course may also allow you to apply those methods to real-world scenarios, which is particularly relevant to a Portfolio Manager's day-to-day tasks.

See salaries and explore the career path for Portfolio Manager

Corporate Finance Analyst

A Corporate Finance Analyst plays a vital role in managing a company's financial activities. Their responsibilities include analyzing financial data, creating financial models, and supporting strategic decision-making for the company. This course helps you understand the fundamentals of financial statement analysis which is crucial for a Corporate Finance Analyst. By gaining experience in performing advanced DuPont analysis and applying real-world cases, you'll better understand how to draw conclusions based on quantitative data, which will make you a more effective Corporate Finance Analyst.

See salaries and explore the career path for Corporate Finance Analyst

Hedge Fund Analyst

A Hedge Fund Analyst researches investment opportunities, analyzes market data, and helps to implement strategies for their fund. This role requires a strong understanding of financial statements and the ability to use various analytical techniques to assess the financial health of a company. This course may help you learn how to extract firm specific financial information, interpret segment disclosures, and perform advanced DuPont analysis, which are all useful skills for a Hedge Fund Analyst. The course's practical approach may prepare you to analyze financial information effectively and make informed recommendations.

See salaries and explore the career path for Hedge Fund Analyst

Private Equity Analyst

A Private Equity Analyst evaluates and analyzes potential investment opportunities in private companies. They perform due diligence, assess risk, and contribute to investment decisions. This role requires a strong grip on financial statement analysis. This course may build the analytical skills needed to extract firm-specific financial information, conduct ratio analyses, and interpret segment disclosures, all of which are essential for a Private Equity Analyst. The course may also be helpful in preparing you to confidently examine a firm's financial health.

See salaries and explore the career path for Private Equity Analyst

Financial Controller

A Financial Controller oversees a company's accounting and financial reporting activities. This role requires deep understanding of financial statements and how to interpret them. This course will help develop a foundation in extracting financial information and using analytical techniques to assess a company's financial health. The Financial Controller can use this to more effectively examine a firm's financial position, interpret segment disclosures, and conduct ratio analysis to better inform financial decisions based on quantitative data. These skills are critical to the duties of this role.

See salaries and explore the career path for Financial Controller

Business Valuator

A Business Valuator determines the economic value of a company or its assets, often for legal, tax, or investment purposes. They analyze financial statements, assess market conditions, and apply valuation methods. This course may be helpful in developing a solid foundation of financial statement analysis, which helps Business Valuators to understand financial health and draw conclusions. It may also help you understand how to interpret financial disclosures when you examine firm financial information, which can be a part of a Business Valuator's process.

See salaries and explore the career path for Business Valuator

Management Consultant

A Management Consultant provides strategic advice to organizations on improving performance, typically working on a project basis. This work often involves analyzing financial data and assessing the financial health of a company. This course may be helpful in developing skills for extracting firm-specific financial information, performing ratio analysis, and interpreting segment disclosures. This helps to better understand how to examine firm financial information when preparing reports for clients. Although this role is broader than finance, a solid grounding in financial analysis as this course provides, may be useful in a Management Consultant's work.

See salaries and explore the career path for Management Consultant

Auditor

An Auditor examines financial records and operations to ensure accuracy, compliance, and efficiency. They assess the financial health of an organization, identify risks, and provide recommendations for improvement. This course may help you learn how to extract financial information and interpret segment disclosures. Performing both basic and advanced ratio analyses helps develop skills in evaluating financial information, which can be a part of an Auditor's tasks. By understanding how to confidently assess a company’s financial health using quantitative data, you will be more effective as an Auditor.

See salaries and explore the career path for Auditor

Commercial Lender

A Commercial Lender evaluates loan applications and manages loan portfolios for businesses. This requires a careful assessment of a company's financial standing and ability to repay loans. This course may be useful in understanding how to extract financial information and conduct ratio analysis, which is key to a Commercial Lender's work. The ability to examine a firm's financial position and interpret segment disclosures may help you make informed lending decisions. As this course teaches basic and advanced ratio analysis, you may find it helpful to a career as a Commercial Lender.

See salaries and explore the career path for Commercial Lender

Budget Analyst

A Budget Analyst is responsible for developing, managing, and monitoring budgets for organizations. They work with financial statements, analyze spending patterns, and recommend cost-saving measures. This course may be helpful to learn how to analyze and effectively evaluate financial information by identifying reliable sources and applying appropriate analytical techniques. This may improve your understanding of finance and help you more effectively manage budgets. The ability to examine firm financial information and perform ratio analysis may be useful to a Budget Analyst.

See salaries and explore the career path for Budget Analyst

Actuary

An Actuary assesses and manages financial risks, particularly in insurance and finance. They use mathematical and statistical techniques to analyze financial data and forecast future outcomes. This course may be useful in helping you understand financial statements and perform ratio analysis. Although this course does not teach math or statistics directly, it may be helpful in that it provides a foundation of financial analysis. The understanding of how to interpret segment disclosures and draw conclusions based on quantitative analysis may be useful in an Actuary role.

See salaries and explore the career path for Actuary

Reading list

We've selected two books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in Financial Statement Analysis: Fundamental Ratio Analysis.

Fundamentals of Financial Accounting

Save

Provides a comprehensive overview of financial accounting principles. It is helpful for students who need to refresh their understanding of the fundamentals before diving into ratio analysis. While not strictly required, it serves as a valuable reference for understanding the context behind the financial statements being analyzed. It is commonly used as a textbook in introductory financial accounting courses.

Fundamentals of Financial Accounting

Paperback

Check price

Fundamentals of Financial Accounting

Kindle Edition

Check price

The Intelligent Investor, 3rd Ed.

Save

This classic book provides a framework for understanding and interpreting financial statements from an investment perspective. It offers valuable insights into identifying undervalued companies and assessing their financial strength. While the book is somewhat dated, the fundamental principles remain relevant and provide a solid foundation for financial analysis. adds more depth to the course by providing a value investing perspective.

The Intelligent Investor, 3rd Ed.: The Definitive...

Hardcover

Financial Statement Analysis

Fundamental Ratio Analysis

What's inside

Learning objectives

Traffic lights

Save this course

Reviews summary

Fundamental financial statement ratio analysis

Activities

Career center

Reading list

Share

Similar courses