All trading basics

Analyzing the Financial Statements

There is a lot to be said for valuing a company, it is no easy task. If you have yet to discover this goldmine, the satisfaction one gets from tearing apart a companies financial statements and analyzing it on a whole different level is great - especially if you make or save yourself money for your efforts.

In this section we will try to present 19 basic fundamental analysis ratios to help you get started. The ratios are presented in a simplified manner to make them easier to understand. Sure some of the ratios have different varieties, but by the end you will understand the basic premise and reasons for fundamental analysis.

The Ratios:

Performance Activity
Average Interest Rate Asset Turnover
Book Value Per Share Collection Ratio
Cash Flow to Assets Inventory Turnover
Common Size Analysis Financing
Dividend Payout Ratio Debt / Asset Ratio
Earnings Per Share Debt / Equity Ratio
Gross Profit Margin Liquidity
Price / Earnings Ratio Acid Test (Quick Ratio)
Profit Margin Interest Coverage
Return on Assets Working Capital Ratio
Return on Equity