Financial Analysis Techniques

Free CFA Level I lesson in Financial Statement Analysis. 14 min read, ~2,072 words.

Four ratio families: activity (efficiency), liquidity (short-term coverage), solvency (long-term debt capacity), profitability (return generation). DuPont 3-step: ROE = Net Margin × Asset Turnover × Leverage. 5-step adds Tax Burden (NI/EBT) and Interest Burden (EBT/EBIT). Cash Conversion Cycle = DOH + DSO − DPO. Lower is better; a negative value...