Financial Ratios

What you'll learn

• ✓Compute and interpret key ratios

Lessons

1. ☕
   Two Coffee Chains, One Question

   Why ratios beat raw numbers
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2. Valuation Ratios

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3. Profitability Ratios

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4. Leverage and Liquidity

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5. Apply: Walmart vs Target

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6. Final Boss: Which Ratio When?

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• Investment Valuation, Aswath Damodaran (3rd ed.)
  Wiley · book
  Definitions and intuition for P/E, P/B, EV/EBITDA, P/Sales, and when each multiple breaks down.
• Financial Statement Analysis and Security Valuation, Stephen Penman
  McGraw-Hill · book
  DuPont decomposition, profitability and leverage ratio framework, distinction between operating and financing returns.
• Investments, Bodie, Kane, Marcus
  McGraw-Hill · book
  Ratio analysis chapter, current ratio, quick (acid-test) ratio, interest coverage, classic formulas.
• S&P Capital IQ Ratio Glossary
  S&P Global · data
  Standard industry definitions used to align ratio formulas with practitioner usage.
  https://www.spglobal.com/marketintelligence/en/
• Walmart Inc. Form 10-K, fiscal year ended Jan 31 2024
  U.S. Securities and Exchange Commission · institutional
  Source for the rounded Walmart revenue, net income, assets, equity, and debt figures used in lesson 5.
  https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000104169&type=10-K
• Target Corporation Form 10-K, fiscal year ended Feb 3 2024
  U.S. Securities and Exchange Commission · institutional
  Source for the rounded Target revenue, net income, assets, equity, and debt figures used in lesson 5.
  https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000027419&type=10-K
• DuPont analysis: history and use
  Britannica / Investopedia (cross-checked with Penman) · reference
  Background on the DuPont decomposition's origin at the DuPont chemical company in the 1920s.