To make profitable investment decisions you need to be able to read and analyze financial statements.
The fundamentals of ratio analysis are important skills for any investor, executive/manager, and entrepreneur/small business to grow.
Without it, you won't know what your margin profile is, or how leveraged a stock/business is, or even if you're making cash flow.
I'll teach you how to analyze any stock or business and be able to tell how it is performing right away.
You will learn financial ratios for a variety of uses including:
- Evaluating margins:
Learn how to calculate and interpret gross margin, operating margin and net margin.
- Determining liquidity:
Is the stock about to go bankrupt? Assessing liquidity is important to make sure a stock is solvent in the short term.
You'll learn about how to analyze working capital and use the current ratio in your decisions.
- Assessing debt and leverage:
Warren Buffett (along with other popular value investors) like to avoid stocks with large amounts of debt. This is because large debt could result in earnings pressure or even bankruptcy.
Learn how to evaluate various debt metrics like debt/equity and debt/EBITDA.
- Calculating profitability:
There's more than one way to evaluate the profitability of a business.
Warren Buffett's favorite metric is return on equity (ROE) - which is discussed in the book. But we'll also go over other popular metrics.
- Measuring activity and efficiency:
How long is it taking your business to sell its inventory?
How long does it take to collect your receivables from customers?
These are all important things to know. I'll teach you how to measure the activity of your working capital to ensure cash flow is optimized.
- Stock valuation:
Never over-pay for a stock/business ever again. I'll teach you how to measure the valuation of any stock with the P/E ratio, P/B ratio, EV/EBITDA, and much more.
Each chapter includes a description of the type of ratio, a discussion of the formula, examples, and additional insights and commentary.
Start making better business decisions today!