In this chapter, we’ll cover What is Ratio Analysis, Users of Financial Analysis, Types of Comparison and different Types of Ratios.

[S3VIDEO file=’https://www.financewalk.com/videos/Financial Ratio Analysis-I.mp4′]

**Session expired**

Please log in again. The login page will open in a new window. After logging in you can close it and return to this page.

I have a doubt..how to calculate ROCE…i know how to calculate..but i try to apply in real time the ans is not good..can you give me a real example with profit and loss statement?.and give me a comparission of current year and previous yr roce ?

Hi Balakumar,

What do you mean by “ans is not good”?

it mean i got a wrong answer..

Please go to Lesson 3 in this module. and check the Excel sheet.

Can you pls elaborate on how the Fixed Int cov ratio helps to evaluate the exact time when the repayment of debt shud commence and also how the payback period can be arrived at by using this ratio?

The formula is EBIT/Interest Expense.

The higher the ratio, it’s better. The ratio tells you how many times Interest is covered by EBIT.

1) Can you pls elaborate on the rationale for inclusion of DTL (quasi equity) in Equity (DE Ratio)

2) And also pls elaborate on your explanation of Book value of equity often being understated and how that impacts the DE Ratio….Sorry didnt get that.

1. What is DTL?

2. Book value of equity is nothing but net worth of company.

I did not get your question clearly.

Sorry, I meant Deferred Tax Liability….and my question was why it is a part of Equity and not Debt?

Hi Ganesh,

Deferred income taxes are the most typical quasi-equity account for companies. Until the taxes are paid to the government, the funds belong to the shareholders and the shareholders expect to earn a return on these funds. So it’s treated as quasi-equity.

The link was good

Thanks Narayanan. Keep reading 🙂