From the course: Running a Profitable Business: Understanding Financial Ratios
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Introduction to financial ratio analysis
From the course: Running a Profitable Business: Understanding Financial Ratios
Introduction to financial ratio analysis
- Now, when it comes to financial ratio analysis, I like to borrow a quote from Winston Churchill. He said the following. "The further backward you can look, "the further forward you can see." We analyze financial ratios to tell us if a company has done well or poorly in the past and to help us see how the company might do in the future. That brings us to financial ratio analysis, which is simply the examination of relationships among financial statement numbers. We're going to do a lot of dividing one number by another to draw conclusions. When it comes to ratio analysis, we're going to do two types. One, we're going to compare the same company across time to see how the company has performed over time. And secondly, at the same point in time, we're going to compare across companies. We'll begin our discussion by looking at a company most of us are familiar with, Target, a retailer. In 2013, they reported income of $2…
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