Financial Statement Analysis

Liquidity (Can the company pay its short-term debts on time? - Short term financial stability)

1. Current Ratio
2. Quick Ratio (Acid Test)

Gearing or Leverage or Financial Stability (Solvency) Ratio

(Can the company survive in the long term and handle its debt? - Financial stability and structure of the company)

1. Debt Ratio
2. Equity ratio
3. Debt-to-Equity ratio
4. Time Interest Ratio

Management Efficiency (Indicate the effective utilisation of assets)

1. Inventory Turnover & Average Days in Inventory
2. Accounts Receivables Turnover & Average Collection Period
3. Total Assets Turnover 

Profitability (How good is the company at making profit? - Performance of the business)

1. Gross Profit Margin
2. Net Profit Margin
3. Return on Total Assets (ROA)
4. Return on Capital Employed (ROCE)
5. Return on Ordinary Shareholders’ Equity (ROE)

Investment (The indication of market performance pertaining to return of the ordinary shares nvested)

1. Earnings per Share (EPS)
2. Price–Earnings Ratio (P/E)
3. Dividend per shares
4. Dividend Yield & Dividend Payout

Discussions

1. Comparison between the Debt-to-Equity Ratio and the Debt Ratio
2. Creative accounting
3. How it can impact ratio analysis
4. The limitations of using ratio analysis to evaluate a firm’s performance and financial health