Financial Statement Ratios and Performance Metrics

Free CPA FAR (Financial Accounting & Reporting) lesson in Financial Reporting. 28 min read, ~4,234 words.

Profitability ratios scale earnings to revenue or capital (gross margin, net margin, ROA, ROE, EBITDA margin). Liquidity ratios test short-term survival in increasing strictness (current, then quick, then cash). Solvency ratios test long-term debt capacity under fixed obligations (debt-to-equity, debt-to-assets, TIE, DSCR). Activity (efficiency) ratios convert turnover into days, where...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• I.F1

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