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Financial Ratios play a big part in fundamental analysis(https://www.edelweiss.in/investology/fundamental-analysis-218cf3).<br>Ratio analysis can help break down information on a companyu2019s financial statements. It helps reveal valuable information about a companyu2019s profitability, debt repayment ability, operational efficiency etc. <br>This presentation will give you a deep insight into the various financial ratios.
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Introduction Financial Ratios play a big part in fundamental analysis. Ratio analysis can help break down information on a company’s financial statements. It helps reveal valuable information about a company’s profitability, debt repayment ability, operational efficiency etc. Ratio analysis helps answer important questions like: Is a company’s stock valued appropriately, given its growth prospects and the valuation of its competitors’ stock? Is the company earning enough to meet its debt obligations and make profits for shareholders?
Important ratios Price multiples are used to ascertain if the company’s stock is fairly valued vis-a-vis competitors’ stocks. Profitability ratios calculate the profit margins of the company. Liquidity ratios estimate the working capital position of the company. These are used to ascertain if a company has enough liquidity to finance its short-term operations. Efficiency ratios estimate the operational efficiency of a company. Risk (coverage) ratios evaluate a company’s ability to meet its debt obligations. They also give indications about a company’s ability to pay dividends.
conclusion Financial statements only give you data that is of little use unless analysed properly. A qualitative analysis using key financial ratios is a great way to quickly analyse financial data and draw actionable insights. These ratios will help you in fundamental analysis even more.
