1. Financial Ratio Analysis Process – Back to Basics

Financial Ratio Analysis Process – Back to Basics

Event ID: 2142017
Recording: Unable to attend? A recording will be available after the presentation.
Date: Recorded on 12/10/2019
Duration: Scheduled for 90 minutes including question and answer period.
Presenter: Gary Deutsch, CPA, president, BRT Publications, LLC
Credits: Live webinar approved for 1.5 NASBA credit hours (Management Services)

Financial Ratio Analysis Process – Back to Basics

A thorough understanding of financial statements is a fundamental tool in credit analysis. Although credit analysts should have a basic sense of how to read financial statements, it is important to apply analysis tools to the data to gain a better understanding of a borrower’s financial position and performance. Financial ratios can significantly improve an analyst’s ability to see an applicant’s total financial picture.

Bankers use a large variety of tools in the credit analysis process. Although most ratios can be important tools for the analysis of some credits, it is unusual to use all ratios in the analysis of each applicant. Analysts must learn to focus on only those ratios that highlight the specific areas of importance for your applicant.

The ratios discussed in this webinar are grouped into categories, based on what they are used to analyze:

  • Liquidity
  • Leverage/coverage
  • Performance/profitability
  • Efficiency
  • Other analysis tools

It is critical for credit analysts to understand that there is no single ratio that unambiguously tells the user whether a loan request is good or bad. In fact, there is not even any combination of ratios that can reliably identify good or bad risks. This does not mean, however, that financial ratio analysis is a waste of time. For users who understand the limitations of ratios, well-selected ratios can provide valuable insights. Appropriately used, financial ratio analysis is a sensitive and insightful credit evaluation tool.

Please join us for this important webinar, in which Gary Deutsch, CPA MBA, will discuss the essential components of the financial ratio analysis process to benefit both new and seasoned analysts.


The discussion of the financial ratio analysis process will cover the following topics:

  • Considerations in using financial ratios
  • Keeping ratio analysis in perspective
  • Liquidity ratios including primary, secondary and liquidity trends
  • Leverage/coverage ratios including primary, secondary, likelihood of bankruptcy, and leverage and debt coverage trends
  • Performance ratios including primary, secondary, and profitability trends
  • Efficiency ratios including primary, secondary, and efficiency/activity trends
  • Other analysis tools including cash flow ratios and ratios for analyzing individuals
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