Ratio Analysis

What is Ratio Analysis in Finance?

Ratio analysis is the quantitative interpretation of the company’s financial performance. It provides valuable information about the organization’s profitability, solvency, operational efficiency and liquidity positions as represented by the financial statements.

This is the most comprehensive guide to Ratio Analysis / Financial Statement Analysis.

This expert-written guide goes beyond the usual gibberish and explores practical Financial Statement Analysis as used by Investment BankersInvestment BankersInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc.read more and Equity Research Analysts.Equity Research Analysts.Equity Research refers to the study of a business, i.e., analyzing a company's financials, performing Ratio Analysis, Financial forecasting in Excel (Financial Modeling), & exploring scenarios to make insightful BUY/HOLD/SELL stock investment recommendations. Moreover, the Equity Research Analysts discuss their findings & details in the Equity Research Reports. read more

Here I have taken Colgate Case Study (2016 to 2020 financials) and calculated Ratios in excel from scratch.

Please note that this Ratio Analysis of the financial statement guide is over 9000 words and took me 4 weeks to complete. To save this page for future reference and don’t forget to share it :-)

Step 1 – Download the Colgate Excel Model Ratio Analysis Template. You will be using this template for the analysis

Download Colgate Ratio Analysis Excel Template

Download these solved and unsolved Colgate Excel Template 

Step 2 – Please note you will get two templates – 1) Unsolved Colgate Model 2) Solved Colgate Model

Step 3- You should start with the Unsolved Colgate Model Template. Follow the step-by-step Ratio Analysis calculation instructions for analysis.

Step 4 – Happy Learning! :-)

Ratio Analysis

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Table of Contents

I have made easy navigation for you to learn Ratio Analysis Types.

Let us look at each one of them one by one.

Framework for Ratio Analysis

Ratio analysis of financial statements is another tool that helps identify changes in a company’s financial situation. A single ratio is not sufficient to adequately judge the financial situation of the company. Several ratios must be analyzed together and compared with prior-year ratios, or even with other companies in the same industry. This comparative aspect of the analysis is extremely important in financial analysis. It is important to note that ratios are parameters and not precise or absolute measurements. Thus, ratios must be interpreted cautiously to avoid erroneous conclusions. An analyst should attempt to get behind the numbers, place them in their proper perspective, and, if necessary, ask the right questions for further types of ratio analysis.

#1 – Vertical Analysis

What is Vertical Analysis?

Vertical analysis is a technique used to identify where a company has applied its resources and in what proportions those resources are distributed among the various balance sheets and income statement accounts. The analysis determines the relative weight of each account and its share in asset resources or revenue generation

Vertical Analysis – Income Statement

  • On the income statement, vertical analysis is a universal tool for measuring the firm’s relative performance from year to year in terms of cost and profitability.
  • It should always be included as part of any financial analysis. Here, percentages are computed in relation to Sales, which are considered to be 100%.
  • This vertical analysis effort in the income statement is often referred to as margin analysis since it yields different margins in relation to sales.
  • It also helps us do the time series analysis ( how the margins have increased/decreased over the years) and also helps in cross-sectional analysis with other comparable companies in the industry.

Colgate Case Study

Vertical Analysis of Colgate Income Statement

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What can we interpret with Vertical Analysis of Colgate?

Vertical Analysis – Balance Sheet

Colgate Case Study

  • For each year, Balance Sheet line items are divided by their respective year’s Top Assets (or Total Liabilities) number.
  • For example, for Accounts Receivables, we calculate as Receivables / Total Assets. Likewise for other balance sheet items
Vertical Analysis - Colgate Balance Sheet Assets

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Interpretation of Colgate’s Vertical Analysis

  • Cash and Cash equivalents decreased from 10.8% in 2016 and currently stand at 5.6% of the total assets. Why is it reducing?
  • Receivables decreased from 11.5% in 2016 to 7.9% in 2020. Does this mean stricter credit policy terms?
  • What is included in “other current assets”? It remains stable within 3.2% to 3.6% of the total assets.
  • What is included in other assets? Why it is increasing?
Vertical Analysis - Colgate Balance Sheet Liabilities

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  • On the liabilities side, there can be many observations we can highlight. Accounts payable decreased continuously over the few years and currently stands at 8.8% of the total assets.
  • Why Long Term Debt as a percentage of liabilities is decreasing over the years. For this, we need to investigate this in the 10K.
  • Non controlling interests have remained in the range of 2.1% to 2.9%

#2 – Horizontal Analysis

What is Horizontal Analysis?

Horizontal analysisHorizontal AnalysisHorizontal analysis interprets the change in financial statements over two or more accounting periods based on the historical data. It denotes the percentage change in the same line item of the next accounting period compared to the value of the baseline accounting period.read more is a technique used to evaluate trends over time by computing percentage increases or decreases relative to a base year. It provides an analytical link between accounts calculated at different dates using the currency with different purchasing powers. In effect, this analysis indexes the accounts and compares the evolution of these over time.

As with the vertical analysis methodology, issues will surface that need to be investigated and complemented with other financial analysis techniques. The focus is to look for symptoms of problems that can be diagnosed using additional techniques. Let’s look at an example.

Colgate Case Study

We calculate the growth rate of each of the line items with respect to the previous year.
For example, to find the growth rate of Net Sales of 2020, the formula is (Net Sales 2020 – Net Sales 2019) / Net Sales 2019

Horizontal Analysis - Income Statement Colgate

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What can we interpret with Horizontal Analysis of Colgate Palmolive?

  • In 2020, Colgate’s new sales growth increased by 5%. Why?
  • The Cost of Sales growth, however, has decreased (positive from the company’s point of view). Why is this so?
  • Net Income growth increased in 2020. Why?

#3 – Trend Analysis

What is Trend Analysis?

Trend Analysis compares the overall growth of key financial statement line items over the years from the base case.

Colgate Case Study

For example, in the case of Colgate, we assume that 2016 is the base case and analyze the performance in Sales and Net profit over the years.

  • We note that Sales have increased by only 8.4% over a period of 4 years (2016-2020).
  • We also note that the overall net profit has increased by 10.4% over the 4 year period.
Colgate - Trend Analysis

Solvency Ratio Analysis

Solvency RatioSolvency RatioSolvency Ratios are the ratios which are calculated to judge the financial position of the organization from a long-term solvency point of view. These ratios measure the firm’s ability to satisfy its long-term obligations and are closely tracked by investors to understand and appreciate the ability of the business to meet its long-term liabilities and help them in decision making for long-term investment of their funds in the business.read more Analysis type is primarily sub-categorized into two parts – Liquidity Analysis and Turnover Analysis of financial statement. They are further sub-divided into 10 ratios, as seen in the diagram below.

We will discuss each subcategory one by one.

Solvency Ratios

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Liquidity ratio analysis measure how liquid the company’s assets are (how easily can the assets be converted into cash) as compared to its current liabilities. There are three common liquidity ratio

#4 – Current Ratio

What is the Current Ratio?

The current ratioCurrent RatioThe current ratio is a liquidity ratio that measures how efficiently a company can repay it' short-term loans within a year. Current ratio = current assets/current liabilities read more is the most frequently used ratio to measure the company’s liquidity as it is a quick, intuitive, and easy measure to understand the relationship between the current assets and current liabilities. It basically answers this question “How many dollars in current assets does the company have to cover each $ of current liabilities.”

Formula

Current Ratio Formula = Current Assets / Current Liabilities

Example

Let us take a simple Current Ratio Calculation example,

  • Current Assets = $200 Current Liabilities = $100
  • Current Ratio = $200 / $100 = 2.0x

This implies that the company has two dollars of current assets for every one dollar of current liabilities.

Analyst Interpretation

  • The current ratio provides us with a rough estimate of whether the company would be able to “survive” for one year or not. If Current Assets are greater than Current Liabilities, we interpret that the company can liquidate its current assets and pay off its current liabilities and survive at least for one operating cycleOperating CycleThe operating cycle of a company, also known as the cash cycle, is an activity ratio that measures the average time required to convert the company's inventories into cash.read more.
  • The current Ratio in itself does not provide us with full details of the quality of current assets and whether they are fully realizable.
  • If the current assets consist primarily of receivables, we should investigate the collectability of such receivables.
  • If current assets consist of large Inventories, then we should be mindful of the fact that inventories will take longer to convert into cash as they cannot be readily sold. Inventories are much less liquid assets than receivables.
  • The average maturities of current assets and current liabilities should also be looked into. If current liabilities mature in the next one month, then-current assets providing liquidity in 180 days may not be of much use.

Colgate Case Study

Let us now calculate the Current Ratios for Colgate.

Current Ratio - Colgate 1

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  • Colgate’s current ratio has deteriorated over the past 5 years. Its current ratio of 2020 was at 0.99x
  • This implies that Colgate’s current assets are almost equal to its current liabilities.
  • We will still need to investigate the quality and liquidity of Current Assets. We note that around 45% of current assets in 2020 consists of Inventories and Other Current Assets. This may affect the liquidity position of Colgate.
  • When investigating Colgate’s inventory, we note that the majority of the Inventory consists of Finished Goods (which is better in liquidity than raw materials supplies and work-in-progress).
Colgate Inventory Breakup

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source: Colgate 2020 10K  Report, Pg – 125

#5 – Quick Ratio Analysis

What is a Quick Ratio?

Sometimes current assets may contain huge amounts of inventory, prepaid expenses, etc. This may skew the current ratio interpretations as these are not very liquid. To address this issue, if we consider the only most liquid assets like Cash and Cash equivalents and Receivables, then it should provide us with a better picture of the coverage of short-term obligations. This ratio is known as the Quick Ratio or the Acid Test.

The rule of thumb for a healthy acid test index is 1.0.

Formula

Quick Ratio Formula = (Cash and Cash Equivalents + Accounts Receivables)/Current Liabilities

Example

Let us take a simple Quick Ratio Calculation example,

  • Cash and Cash Equivalents = $100
  • Accounts Receivables = $500
  • Current Liabilities = $1000

Then Quick Ratio = ($100 + $500) / $1000 = 0.6x

Analyst Interpretation

  • Accounts Receivables are more liquid than inventories.
  • This is because Receivables directly convert into cash after the credit period; however, Inventories are first converted to Receivables, which in turn take further time to convert into cash.
  • In addition, there can be uncertainty related to the true value of the inventory realized as some of it may become obsolete, prices may change, or it may become damaged.
  • It should be noted that a low quick ratio may not always mean liquidity issues for the company. You may find low quick ratios in businesses that sell on a cash basis (for example, restaurants, supermarkets, etc.). In these businesses, there are no receivables; however, there may be a huge pile of inventory.

Colgate Case Study

Let us now look at the Quick Ratio Interpretation in Colgate.

Quick Ratio - Colgate 1

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The Quick Ratio of Colgate is also decreasing (similar to the current ratio). This acid test shows us the company’s ability to pay off short-term liabilities using Receivables and Cash & Cash Equivalents.

#6 – Cash Ratio analysis

What is the Cash Ratio?

The Cash Coverage ratioCash Coverage RatioCash Ratio is calculated by dividing the total cash and the cash equivalents of the company by total current liabilities. It indicates how quickly a business can pay off its short term liabilities using the non-current assets.read more considers only the Cash and Cash Equivalents (there are the most liquid assets within the Current Assets). If the company has a higher cash ratio, it is more likely to be able to pay its short-term liabilities.

Formula

Cash Ratio Formula = Cash & Cash equivalents / Current Liabilities

Example

Let us take a simple Cash Ratio Calculation example,

  • Cash and Cash Equivalents = $500
  • Current Liabilities = $1000

Then Quick Ratio = $500 / $1000 = 0.5x

Analyst Interpretation

  • All three ratios – Current Ratios, Quick Ratios, and Cash Ratios should be looked at for understanding the complete picture of the Company’s liquidity position.
  • The cash Ratio is the ultimate liquidity test. If this number is large, we can obviously assume that the company has enough cash in its bank to pay off its short-term liabilities.

Colgate Case Study

Let us calculate Cash Ratios in Colgate.

Cash Ratio - Colgate 1

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Colgate’s cash ratio has decreased from 0.45x in 2017 to 0.20x in 2020.

Turnover Ratios

We saw from the above three liquidity ratios (Current, Quick, and Cash Ratios) that it answers the question, “Whether the company has enough liquid assets to square off its current liabilities.” So this ratio is all about the $ amounts.

However, when we look at Turnover ratio analysis, we try to analyze the liquidity from “how long it will take for the firm to convert inventory and receivables into cash or time is taken to pay its suppliers.”

Turnover Ratios

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The commonly used turnover ratios include:

  • Receivables turnover
  • Accounts receivables days
  • Inventory turnover
  • Inventory days
  • Payables turnover
  • Payable days
  • Cash Conversion Cycle

#7 – Receivables Turnover Ratio analysis

What is Receivables Turnover Ratio analysis?

Accounts ReceivablesAccounts ReceivablesAccounts receivables refer to the amount due on the customers for the credit sales of the products or services made by the company to them. It appears as a current asset in the corporate balance sheet.read more Turnover Ratio can be calculated by dividing Credit Sales by Accounts Receivables. Intuitively. It provides us the number of times Accounts Receivables (Credit Sales) is converted into Cash Sales

Formula

Receivables Turnover Formula = Credit Sales / Accounts Receivables

Accounts Receivables can be calculated for the full year or for a specific quarter. For calculating accounts receivables for a quarter, one should take annualized sales in the numerator.

Example

Let us take a simple Receivables Turnover Calculation example,

  • Sales = $1000
  • Credit given is 80%
  • Accounts Receivables = $200
  • Credit Sales = 80% of $1000 = $800

Accounts Receivables Turnover = $800 / $200 = 4.0x

Analyst Interpretation

Colgate Case Study

  • To calculate the receivables turnover, we have considered the average receivables. We consider the “average” figures as these are balance sheet items.
  • For, e.g., as shown in the image below, we took the average receivables of 2019 and 2020.
  • Also, please note that I have taken the assumption that 100% of Colgate’s Sales were “Credit Sales.”
Colgate Receivables Turnover

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  • We note that the Receivables Turnover was above 10x in 2016-2020.  In 2020, it was at 12.18x
  • Higher Receivables Turnover implies a higher frequency of converting receivables into cash (this is good!)

#8 – Days Receivables

What are Days Receivables?

Days receivables are directly linked with the Accounts Receivables Turnover. Days receivables express the same information but in terms of the number of days in a year. This provides an intuitive measure of Receivables Collection Days.

Formula

Accounts Receivables Days Formula = Number of Days in Year / Accounts Receivables Turnover

You may calculate Account Receivable days based on the year-end balance sheet numbers.
Many analysts, however, prefer to use the average balance sheet receivables number to calculate the average collection periodCalculate The Average Collection PeriodThe average collection period is the duration of time a company requires to collect all the payments dues on their clients as Accounts receivables. Average collection period = 365/Accounts Receivable turnover ratio. Alternative formula, Average collection period = Average accounts receivable per day/average credit sales per day read more. (a right way is to use the average balance sheet)

Let us take the previous example and find out the Days Receivables.

Example

Let us take a simple Days Receivables Calculation example,

  • Accounts Receivables Turnover = 4.0x
  • Number of days in a year = 365

Days Receivables = 365 / 4.0x = 91.25 days ~ 91 days

This implies that it takes 91 days for the company to convert Receivables into Cash.

Analyst Interpretation

Colgate Case Study

  • Let’s calculate Days Receivables for Colgate. To calculate Days Receivables, we have taken 365 days’ assumption.
  • Since we had already calculated the receivables turnover above, we can easily calculate the day’s receivables now.
Receivable Days

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Days receivables or Average Receivables collection days have decreased from around 34.1 days in 2017 to 30 days in 2020.

  • This means that Colgate is doing a better job of collecting its receivables. They may have started implementing a stricter credit policy.

#9 – Inventory Turnover Ratio analysis

What is Inventory Turnover Ratio analysis?

The Inventory RatioInventory RatioInventory ratio or inventory turnover ratio is an activity ratio that depicts the frequency of replacing the stocks sold by the company in a certain period. It is evaluated as the proportion of the cost of goods sold to the average inventory.read more means how many times the inventories are restored during the year. It can be calculated by taking the Cost of Goods Sold and dividing it by Inventory.

Formula

Inventory Turnover Formula = Cost of Goods Sold / Inventory.

Let us take a simple Inventory Turnover Ratio Calculation example.

Inventory Turnover Ratio = $500 / $100 = 5.0x

This implies that during the year, inventory is used up 5 times and is restored to its original levels.

Analyst Interpretation

You may note that when we calculate receivables turnover, we took Sales (Credit Sales); however, in inventory turnover ratio, we took Cost of Goods Sold. Why?

The reason is that when we think about receivables, it directly comes from Sales made on a credit basis. However, the Cost of Goods sold is directly related to inventory and is carried on the balance sheet at cost.

To get an intuitive understanding of this, you may see the BASE equation.

B + A = S + E

S  = B + A – E

As we note from the above equation, Inventory is directly related to the Cost of Goods Sold.

Colgate Case Study

Colgate Inventory Turnover Ratio

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  • Colgate’s inventory turnover has been decreasing over the last 4 years (In 2020, it was at 4.20x)
  • A lower inventory turnover ratio means that Colgate is taking longer to process its inventory to finished goods.

#10 – Days Inventory

What is the Days Inventory?

Think of Inventory Days as the approximate number of days it takes for inventory to convert into a finished product.

Formula

Inventory Days Formula = Number of days in a year / Inventory Turnover.

Example

Let us take a simple Days Inventory Calculation example. We will use the previous example of the Inventory Turnover Ratio and calculate Inventory Days.

Inventory Days = 365/5 = 73 days.

This implies that Inventory is used up every 73 days on average and is restored to its original levels.

Analyst Interpretation

  • You may also think of inventory days as the number of days a company can continue with production without replenishing its inventory.
  • One should also look at the seasonality pattern in how inventory is consumed, depending on the demand. It is rare that inventory is consumed constantly throughout the year.

Colgate Case Study

Let us calculate the Inventory turnover days for Colgate. Inventory Days for Colgate = 365 / Inventory Turnover.

Colgate - Inventory Days

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  • We see that the inventory processing period has increased from 70.7 days in 2017 to around 86.9 days in 2020.
  • This implies that Colgate is processing its inventory slowly as compared to 2017.

#11 – Accounts Payable Turnover

What is Accounts Payable Turnover?

Payables turnover indicates the number of times that payables are rotated during the period. It is best measured against purchases since purchases generate accounts payable.

Formula

Payables Turnover Formula = Purchases / Accounts Payables

Example

Let us take a simple Accounts Payable Turnover calculation example. From the Balance Sheet, you are provided with the following –

  • Ending Inventory = $500
  • Beginning Inventory = $200
  • Cost of Goods Sold = $500
  • Accounts Payable = $200

In this example, we need to first find out Purchases during the year. If you remember the BASE equation that we used earlier, we can easily find purchases.

B + A = S + E

we get, A = S + E – B

Purchases or A = $500 + $500 – $200 = $800

Payables Turnover = $800 / $200 = 4.0x

Analyst Interpretation

  • Some analysts make the mistake of taking the Cost of Goods Sold in the numerator of this accounts payable turnover formula.
  • It is important to note here that Purchase is the one that leads to Payables.
  • We earlier saw Sales can be Cash Sales and Credit sales. Likewise, Purchases can be Cash Purchases as well as Credit Purchases. Cash Purchases do not result in payables; it is only the Credit Purchases that lead to Accounts payables.
  • Ideally, we should seek Credit Purchase information from the annual report.

Colgate Case Study

Here, we first calculate the Purchases.

Purchases 2020 = COGS 2020 + Inventory 2020 – Inventory 2019

Purchases Formula

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Colgate Payables Turnover
We note that the Payable turnover decreased to 5.12x in 2020. This implies that Colgate is taking a bit longer to make payments to its suppliers.

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Once we have the purchases, we can now find the payables turnover. Please note that we use the average accounts payable to calculate the ratio.

#12 – Days Payable Ratio Analysis

What is Days Payable Ratio analysis?

Payable days represent the average number of days a company takes to make the payment to its suppliers.

Formula

Payables Days Formula = Number of Days in a year / Payables Turnover

Example

Let’s take a simple Payable Days calculation example. We will use the previous example of Accounts PayableAccounts PayableAccounts payable is the amount due by a business to its suppliers or vendors for the purchase of products or services. It is categorized as current liabilities on the balance sheet and must be satisfied within an accounting period.read more Turnover to find the Payable days.

  • We earlier calculated Accounts Payable Turnover as 4.0x
  • Payable Days = 365 / 4 = 91.25 ~ 91 days

This implies that the company pays its clients every 91 days.

Analyst Interpretation

  • The higher the accounts payable days, the better it is for the company from a liquidity point of view.
  • Payable days can be affected by seasonality in the business. Sometimes a business may stock inventories due to the upcoming business cycle. This may distort the interpretations that we make on payable days if we are not aware of seasonality.

Colgate Case Study

Let us calculate Accounts Payable for Colgate. Since we have already calculated the Payables Turnover, we can calculate Payable days = 365/Payables Turnover.

Colgate - Payable Days

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Payable days have increased to 71.4 days in 2020 as compared to 68.5 days in 2017.

#13 – Cash Conversion Cycle

What is the Cash Conversion Cycle?

The cash conversion cycle is the total time taken by the firm to convert its cash outflows into cash inflows (returns). Think of Cash Conversion Cycle is a time taken by a company to purchase the raw materials, then convert inventory into the finished product and sell the product and receive cash and then make the necessary payout for the purchases.

Cash Conversion Cycle

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The Cash Conversion cycle depends primarily on three variables – Receivable Days, Inventory Days, and Payable Days.

Formula

Cash Conversion Cycle Formula = Receivable Days + Inventory Days – Payable Days

Example

Let us take a simple Cash Conversion Cycle calculation example,

  • Receivable Days = 100 days
  • Inventory Days = 60 days
  • Payable Days = 30 days

Cash conversion cycle = 100 + 60 – 30 = 130 days.

Analyst Interpretation

  • It signifies the number of days the firm’s cash is stuck in the operations of the business.
  • A higher cash conversion cycle means that it takes a longer time for the firm to generate cash returns.
  • However, a lower cash conversion cycle may be viewed as a healthy company.
  • Also, one should compare the cash conversion cycle with the industry averages so that we are in a better position to comment on the higher/lower side of the cash conversion cycle.

Colgate Case Study

Cash Conversion Cycle of Colgate = Receivable Days + Inventory Days – Payable Days

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  • Overall, we note that the cash collection cycle has increased from around 36.35 days in 2017 to 45.51 days in 2020.
  • This implies that overall, the Colgate cash conversion cycle is deteriorating each year.
  • We note that the receivables collection period has decreased overall, which has contributed to the decrease in the cash conversion cycle.
  • Additionally, we also note that the average payable days have increased, which again positively contributed to the cash conversion cycle.
  • However, the increase in inventory processing days in recent years has negatively affected its cash conversion cycle.

Ratio Analysis – Operating Performance 

Operating performance ratios try and measure how the business is performing at the ground level and is sufficiency, generating returns relative to the assets deployed.

Operating Performance Ratios are two sub-divided as per the diagram below

Operating Performance

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Operating Efficiency Ratios

#14 – Asset Turnover Ratio analysis

What is Asset Turnover Ratio analysis?

The asset turnover ratio is a comparison of sales to total assets. This ratio provides an indication of how efficiently the assets are being utilized to generate sales.

Formula

Asset Turnover ratio Formula = Total Sales / Assets

Example

Let us take a simple Cash Conversion Cycle calculation example. 

  • Sales of Company A = $900 million
  • Total Assets = $1.8 billion

Asset Turnover = $900/$1800 = 0.5x

This implies that for every $1 of assets, the company is generating $0.5

Analyst Interpretation

  • Asset turnovers can be extremely low or very high, depending on the Industry they operate in.
  • The asset turnover of the Manufacturing firm will be on the lower side due to a large asset base as compared to a company that operates in the services sector (lower assets).
  • If the firm has seen considerable growth in assets during the year or the growth has been seasonal, then the analyst should find additional information to interpret such numbers.

Colgate Case Study

Asset Turnover of Colgate = Sales / Average Assets
We note that the Asset Turnover for Colgate is showing a declining trend. Asset turnover was at 1.06x in 2020;

Asset Turnover - Colgate1

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#15 – Net Fixed Asset Turnover

What is Net Fixed Asset Turnover?

Net Fixed Asset turnover reflects the utilization of fixed assets (Property Plant and Equipment)Property Plant And Equipment)Property plant and equipment (PP&E) refers to the fixed tangible assets used in business operations by the company for an extended period or many years. Such non-current assets are not purchased frequently, neither these are readily convertible into cash. read more.

Formula

Net Fixed Asset Turnover Formula = Total Sales / Net Fixed Assets

Example

Let us take a simple Net Fixed Asset Turnover calculation example.

  • Total Sales = $600
  • Net Fixed Assets = $600

Net Fixed Asset Turnover = $600 / $600 = 1.0x

This implies that for every $ spent on the fixed assets, the company is able to generate $1.0 in revenues.

Analyst Interpretation

Colgate Case Study

Net Fixed Asset Turnover of Colgate = Sales / Average Net Fixed Assets (PPE, net)

Net Fixed Asset Turnover - Colgate1

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Unlike Asset Turnover, Net Fixed asset turnover is also showing an increasing trend.
Net Fixed Asset turnover was at 3.91 in 2017; however, this ratio has increased to 4.41x in 2020.

#16 – Equity Turnover

What is Equity Turnover?

Equity turnover is the ratio of Total Revenue to the Shareholder’s Equity Capital. This ratio measures how efficient the company is deploying equity to generate sales.

Formula

Equity Turnover Ratio Formula = Total Sales / Shareholder’s Equity

Example

Let us take a simple Equity Turnover calculation example,

  • Total Sales = $600
  • Shareholder’s Equity = $300

Equity Turnover RatioEquity Turnover RatioThe equity turnover ratio depicts the organization's efficiency to utilized the shareholders' equity to generate revenue. It is evaluated by dividing the total sales from the average shareholders' equity. read more = $600 / $300 = 2.0x.

This implies that the company is generating $2.0 of sales for every $1.0 of shareholder’s equity.

Colgate Case Study

Colgate Equity Turnover = Sales / average Shareholder’s Equity

Equity Turnover Ratio - Colgate1

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We note that historically, Colgate’s Equity Turnover is negative or very high. We cannot conclude much from here.
This was primarily due to two reasons – a) Share buyback program of Colgate resulting in lowering of the Equity base each year. b) Accumulated losses net of taxes (these are those losses that don’t flow into the income statement).Colgate - SE

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Operating Profitability Ratio Analysis

Operating Profitability Ratios measure how much the costs are relative to the sales and how much profit is generated in the overall business. We try to answer questions like “how much the profit percentage” or “Is the firm controlling its expenses by buying inventory etc. at a reasonable price?”

#17 – Gross Profit Margin

What is the Gross Profit Margin?

Gross Profit is the difference between sales and the direct costDirect CostDirect costs are costs incurred by an organization while performing its core business activity and can be attributed directly in the production cost, such as raw material costs, wages paid to factory staff, power & fuel expenses in a factory, and so on, but do not include indirect costs such as advertisement costs, administrative costs, etc.read more of making a product or providing service. Please note that costs like overheads, taxes, interests are not deducted here.

Formula

Gross Margin Formula = (Sales – Costs of Goods Sold)/Sales = Gross Profit / Sales

Example

Let us take a simple Gross Margin calculation example,

Assume from the Sales of a firm is $1,000 and its COGS is $600

Analyst Interpretation

  • Gross Margin can vary drastically between industries. For example, digital products sold online will have an extremely high Gross Margin as compared to a company that sells laptops.
  • Gross margin is extremely useful when we look at the historical trends in the margins. If the Gross Margins has increased historically, then it could be either because of the price increase or control of direct costs. However, if the Gross margins show a declining trend, then it may be because of increased competitiveness and therefore resulting in the decreased sales price.
  • In some companies, Depreciation expenses are also included in Direct Costs. This is incorrect and should be shown below the Gross Profit in the Income Statement.

Colgate Case Study

Let us calculate Colgate’s Gross Margin. Colgate’s Gross Margin = Gross Profit / Net Sales.

Gross Profit Margin - Colgate

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Please note that depreciation related to manufacturing operations are included herein Cost of Sales (Colgate 10K 2020, pg 79)
Shipping and handling costs may be reported either in the Cost of Sales or Selling General and Admin Expenses. Colgate has, however, reported these costs as a part of Selling General and Admin Expenses. If such expenses are included in the Cost of Sales, then the Gross margin of Colgate would have decreased by 845 bps and decreased by 810 bps in both 2019 and 2018, respectively.

Colgate - Shipping and Handling Cost
source: – Colgate 10K 2020, pg 54

#18 – Operating Profit Margin

What is the Operating Profit Margin?

Operating profit or Earnings Before Interest and TaxesEarnings Before Interest And TaxesEarnings before interest and tax (EBIT) refers to the company's operating profit that is acquired after deducting all the expenses except the interest and tax expenses from the revenue. It denotes the organization's profit from business operations while excluding all taxes and costs of capital.read more (EBIT) margin measures the rate of profit on sales after operating expenses. Operating income can be thought of as the “bottom line” from operations.

Formula

Operating Profit Margin = EBIT / Sales

Example

Let us take a simple Operating Profit Margin calculation example,

We will use the previous example.

  • Assume from the Sales of a firm is $1,000 and its COGS is $600
  • SG&A expense = $100
  • Depreciation and Amortization = $50
  • EBIT = Gross Profit – SG&A – D&A = $400 – $100 – $50 = $250

EBIT Margin = $250/$1000 = 25%

Analyst Interpretation

Colgate Case Study

Colgate’s Operating Profit = EBIT / Net Sales.

Operating Profit Margin - Colgate

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Historically, Colgate’s Operating Profit has remained in the range of 24-26.0%
However, in 2019, Colgate’s EBIT Margin decreased significantly to 22.6%. In 2019, Operating profit included charges resulting from the restructuring expenses (Global Growth and Efficiency Program), acquisition-related costs and a benefit related to a value-added tax matter in Brazil

Non GAAP Operating Profit - Colgate

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#19 – Net Margin

What is Net Margin?

Net Margin is basically the net effect of operating as well as financing decisions taken by the company. It is called a Net Margin because, in the numerator, we have Net Income (Net of all the operating expenses, interest expenses as well as taxes)

Formula

Net Margin Formula = Net Income / Sales

Example

Let us take a simple Net Margin calculation example; continuing with our previous example, EBIT = $250, Sales = $1000.

Net Profit Margin = $105/$1000 = 10.5%

Analyst Interpretation

Colgate Case Study

Let us have a look at the Net Margin of Colgate.

Net Profit Margin - Colgate

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  • Historically, Net Margin for Colgate has been in the range of 13.1% – 16.4%.
  • However, Net Margin increased in 2020 to 16.4% primarily due to aftertax benefits of $13 million resulting from the restructuring program (Global Growth and Efficiency Program) and $71 million tax benefit related to
    subsidiary and operating structure initiatives.

#20 – Return on Total Assets

What is Return on Total Assets?

Return on Assets or Return on Total Assets relates to the firm’s earnings to all capital invested in the business.

Formula

Return on Total Asset Formula = EBIT / Total Assets.

Two important things to note there –

  • Please note that in the denominator, we have Total Assets, which basically takes care of both the Debt and Equity Holders.
  • Likewise, in the numerator, the Earnings should reflect something that is before the payment of interest.

Example

Let us take a simple Return on Total example,

  • Company A has an EBIT of $500 and Total Assets = $2000
  • Return on Total Assets = $500/$2000 = 25%

This implies that the company is generating a Return on Total Assets of 25%.

Analyst Interpretation

  • Many analysts use the numerator as Net Income + Interest Expenses instead of EBIT. They basically are deducting the taxes.
  • Return on Assets can be low or high, depending on the type of industry. If the company operates in a capital-intensive sector (Asset heavy), then the return on assets may be on the lower side. However, if the company is Asset Light (services or internet company), they tend to have had a higher Return on Assets.

Colgate Case Study

Let us now calculate the Return on the total AssetsCalculate The Return On The Total AssetsReturn on Total Assets is a measure of a company's income proceeds left for shareholders divided by the total assets owned by the company. ROA = Net Income/Total Assets.read more of Colgate. Colgate’s Return On Total Assets = EBIT / Average total assets

Return on Total Assets - Colgate

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Colgate’s Return on total assets has been declining since 2017. Most recently, it has declined to its lowest at 25.1%. Why?

Let’s investigate.

  • Two reasons can contribute to decreasing – either the denominator, i.e., average assets have increased significantly, or the Numerator Net Sales have dropped significantly.
  • In Colgate’s case, the total assets increased significantly to $15.03 billion in 2019 and $15.92 billion in 2020. We also note that the overall Net sales have increased by 5% in 2020. The net effect of the two has resulted in a decrease in the decline in Return on Total Assets.

#21 – Return on Equity

What is Return on Equity?

Return on Equity means the rate of return earned on the Total Equity of the firm. It can be thought of as dollar profits a company generates on each dollar investment of Total Equity.

Formula

Return on Equity Formula = Net Income / Total Equity

Please note Total Equity = Ordinary Capital + Reserves + Preference + Minority Interests

Example

Let us take a simple Return on Equity example.

  • Net Income = $50
  • Total Equity = $500

Return Equity = $50/$500 = 10%

Analyst Interpretation

Colgate Case Study

Return on Equity - Colgate

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#22 – Return on Owner’s Equity

What is Return on Owners Equity?

Return on equity or Return on Owner’s Equity is based only on the common shareholder’s equity. Preferred dividends and minority interests are deducted from Net Income as they are a priority claim. Return on equity provides us with the Rate of return earned on the Common Shareholder’s Equity.

Formula

Return on Owners Equity = Net Income (after pref dividends and minority interest) / Common Shareholder’s Equity

Example

Let us take a simple ROE calculation example,

  • Net Income = $50
  • Total Equity = $500
  • Owners Equity = $400

ROE (owners) = $50 / $400 = 12.5%

Analyst Interpretation

  • Since common shareholder’s equity is a year-end number, some analyst prefer taking the average shareholder’s equity (average of beginning and year-end)
  • ROE can be basically considered as a profitability ratio from a shareholder’s point of view. This provides how much returns on generated from shareholder’s investments, not from the overall company investments in assets. (Please note Total Investments = Shareholder’s Equity + Liability that includes Current Liabilities and Long term Liabilities)
  • ROE should be analyzed over a period of time (5 to 10 year period) in order to get a better picture of the growth of the company. Higher ROE does not get passed directly to the shareholders. Higher ROE -> Higher Stock Prices.

Colgate Case Study

Return on Equity - Colgate
Like the Return on Total Equity, Return on Owners Equity has jumped significantly to 626.7% in 2020.
Return on Equity increased because of the very low Shareholder’s Equity base in 2019-2020. (reasons as discussed earlier in Return on Total Equity).

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#23 – Dupont ROE

What is Dupont ROE?

Dupont ROE is nothing but an extended way of writing an ROE formula. It divides ROE into several ratios that collectively equal ROE while individually providing insight to the most important term in ratio analysis of a financial statement.

Formula

The above formula is nothing but the ROE formula = Net Income / Shareholder’s Equity.

Example

Let us take a simple Dupont ROE calculation example.

  • Net Income = $50
  • Sales = $500
  • Total Assets = $200
  • Shareholder’s Equity = $400
  • Gross Margin = Net Income / Sales = $50 / $500 = 10%
  • Asset Turnover = Sales / Total Assets = $500/$200 = 2.5x
  • Asset Leverage = Total Asset / Shareholder’s Equity = $200 / $400 = 0.5

Dupont ROE = 10% x 2.5 x 0.5 = 12.5%

Analyst Interpretation

  • THE Dupont ROE formula provides additional ways to analyze the ROE ratio and helps us find out a reason for the final number.
  • The first term (Net Income/Sales) is nothing but the Net Profit Margin. We know that the Retail sector operates on a low-profit margin; however, software product-based companies may operating on a high-profit margin.
  • The second term here is (Sales/Total Assets); we normally call this term Asset turnovers. It provides us with a measure of how efficiently the assets are being utilized.
  • The third term here is (Total Assets / Shareholder’s Equity); we call this ratio Asset Leverage. Asset leverage gives insight into how the company may be able to finance the purchase of new assets. Higher Asset leverage does not mean that it is better than the low multiplier. We need to look at the financial health of the company by performing a full ratio analysis of the financial statement.

Colgate Case Study

Colgate Dupont ROE = (Net Income / Sales) x (Sales / Total Assets) x (Total Assets / Shareholder’s Equity)
Please note that the Net Income is after the minority shareholder’s payment.
Also, the shareholder’s equity consists of only the common shareholders of Colgate.

Dupont ROE - Colgate1

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We note that the asset turnover has shown a declining trend over the past 7-8 years.
Profitability, however, has increased over the past 4 years.

Asset leverage (average total assets / average total equity) is also decreasing over the years. You may note that the Asset Leverage has shown a steady decline over the past 4 years and is currently standing at 18.65x.
The net result due to the three above factors resulted in a decrease in ROE.

Risk Analysis

Risk analysisRisk AnalysisRisk analysis refers to the process of identifying, measuring, and mitigating the uncertainties involved in a project, investment, or business. There are two types of risk analysis - quantitative and qualitative risk analysis.read more examines the uncertainty of income for the firm and for an investor.

 Total firm risks can be decomposed into three basic sources – 1) Business risk, 2) Financial Risk 3) External Liquidity Risk

Risk Analysis

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Business Risk

Wikipedia defines it as “the possibility a company will have lower than anticipated profits or experience a loss rather than making a profit.” If you look at the income statement, there are many line items that contribute to the risk of making losses. In this context, we discuss three kinds of business risks – Total Leverage, Operating Leverage, and Financial Leverage.

# 24 – Operating Leverage

What is Operating Leverage?

Operating leverage is the percentage change in operating profit relative to sales. Operating leverage is a measure of how sensitive the operating income is to the change in revenues.

Formula

Operating Leverage Formula = % change in EBIT / % change in Sales.

Please note that the greater use of fixed costsFixed CostsFixed Cost refers to the cost or expense that is not affected by any decrease or increase in the number of units produced or sold over a short-term horizon. It is the type of cost which is not dependent on the business activity.read more, the greater the impact of a change in sales on the operating income of a company.

Example

Let us take a simple Operating Leverage calculation example.

  • Sales 2020 = $500, EBIT 2020 = $200
  • Sales 2019 = $400, EBIT 2019 = $150
  • % change in EBIT = ($200-$150)/$100 = 50%
  • % change in Sales = ($500-$400)/$400 = 25%

Operating Leverage = 50/25 = 2.0x

This means that when Operating profit changes by 2% for every 1% change in Sales.

Analyst Interpretation

  • The greater the fixed costs, the higher is the operating leverage.
  • Between three to ten years of data should be used for calculating Operating Leverages.

Colgate Case Study

Operating Leverage - Colgate

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# 25. Financial Leverage

What is Financial Leverage?

Financial leverage is the percentage change in Net profit relative to Operating Profit. Financial leverage measures how sensitive the Net Income is to the change in Operating Income.

Financial leverage primarily originates from the company’s financing decisions (usage of debt). Like in the operating leverage, fixed assetsFixed AssetsFixed assets are assets that are held for the long term and are not expected to be converted into cash in a short period of time. Plant and machinery, land and buildings, furniture, computers, copyright, and vehicles are all examples.read more lead to higher operating leverage. In Financial leverage, the usage of debt primarily increases the financial risk as they need to pay off interest

Formula

Financial Leverage formula = % change in Net Income / % change in EBIT

Example

Let us take a simple Financial Leverage calculation example,

  • Net Income 2020 = $120, EBIT 2020 = $200
  • Net Income 2019 = $40, EBIT 2019 = $150
  • % change in EBIT = ($200-$150)/$100 = 50%
  • % change in Net Income = ($120-$40)/$40 = 200%

Financial Leverage = 200/50 = 4.0x

This means that Net Income changes by 4% for every 1% change in Operating Profit.

Analyst Interpretation

  • The greater the Debt, the higher is the financial leverage.
  • Between five to ten years of data should be used for calculating Financial Leverages.

Colgate Case Study

Financial Leverage - Colgate
Colgate’s Financial Leverage has remained volatile (-52.97x in 2018 and 1.49x in 2020)

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# 26. Total Leverage

What is Total Leverage?

Total leverage is the percentage change in Net profit relative to its Sales. Total leverage measures how sensitive the Net Income is to the change in Sales.

Formula

Total Leverage Formula = % change in Net Profit / % change in Sales

= Operating Leverage x Financial Leverage

Example

Let us take a simple Total Leverage calculation example,

  • Sales 2020 = $500, EBIT 2020 = $200, Net Income 2020 = $120
  • Sales 2019 = $400, EBIT 2019 = $150, Net Income 2019 = $40
  • % change in Sales = ($500-$400)/$400 = 25%
  • % change in EBIT = ($200-$150)/$100 = 50%
  • % change in Net Income = ($120-$40)/$40 = 200%

Total Leverage = % change in Net Income / % change in Sales =200/25 = 8x.

Total Leverage = Operating Leverage x Financial Leverage = 2 x 4 = 8x (Operating and Financial Leverage calculated earlier)

This implies for every 1% change in Sales, the Net Profit moves by 8%.

Analyst Interpretation

Higher sensitivity could be because of higher operating leverage (higher fixed cost) and higher financial leverage (higher debt), 3-10 years of data should be taken to calculate the total leverage.

Colgate Case Study

Let us now look at the Total Leverage of Colgate.

Total Leverage from Income Statement - Colgate

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Total Leverage - Colgate

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  • Colgate’s Total Leverage is also volatile (as there is significant volatility in operating and financial leverage)

Financial Risk

Financial riskFinancial RiskFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy.read more is the type of risk primarily associated with the risk of default on the company loan. We discuss 3 types of financial risk ratiosRisk RatiosRisk ratio or relative risk measures the risk probability in the exposed group compared to its possibility of occurrence in the non-exposed group. It is evaluated as the proportion of cumulative incidence in the exposed group to the cumulative incidence in the non-exposed group.read more – Leverage Ratio, Interest Coverage Ratio, and DSCR ratio.

# – 27. Leverage Ratio or Debt to Equity Ratio

What is Leverage Ratio?

The leverage ratio calculates how much the company uses debt as compared to its equity. This is an important ratio for bankers as it provides the company’s ability to pay off debt using its own capital.

Formula

Leverage Ratio Formula = Total Debt (current + long term) / Shareholder’s Equity

Generally, the lower the ratio better it is. Debt includes current debt + long-term debt.

Example

Let us take a simple Leverage Ratio calculation example.

Leverage Ratio = ($100 + $900) / $500 = 2.0x

Analyst Interpretation

Colgate Case Study

Leverage Ratio of Colgate = (Current portion of long term debtCurrent Portion Of Long Term DebtCurrent Portion of Long-Term Debt (CPLTD) is payable within the next year from the date of the balance sheet, and are separated from the long-term debt as they are to be paid within next year using the company’s cash flows or by utilizing its current assets.read more + Long term Debt) / Shareholder’s Equity.

Debt to Equity Ratio - Colgate

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The Debt to Equity has decreased from 32.31x in 2018 to 6.90x in 2020. This is primarily due to an increase in shareholder’s equity over the last 3 years. We note that the Debt Ratio in 2020 was 0.87.

# 28. Interest Coverage Ratio

What Is the Interest Coverage Ratio?

The Interest Coverage ratio signifies the ability of the firm to pay interest on the assumed debt.

Formula

Interest Coverage Formula = EBITDA / Interest Expense

Please note that EBITDA = EBIT + Depreciation & Amortization

Example

Let us take a simple Interest Coverage Ratio calculation example,

  • EBIT = $500
  • Depreciation and Amortization = $100
  • Interest Expense = $50
  • EBITDA = $500 + $100 = $600

Interest Coverage Ratio = $600 / $50 = 12.0x

Analyst Interpretation

  • Capital intensive firms have higher depreciation and amortization, resulting in lower operating profit (EBIT)
  • In such cases, EBITDA is one of the most important measures as it is the amount available to pay off interest (depreciation and amortization is a non-cash expense).
  • Higher interest coverage ratios imply a greater ability of the firm to payoff its interests.
  • If Interest coverage is less than 1, then EBITDA is not sufficient to pay off interest, which implies finding other ways to arrange funds.

Colgate Case Study

Colgate’s Interest Coverage Ratio = EBITDA / Interest Expense.
Please note that depreciation and amortization expenses are not provided in the income statement. These were taken from the Cash Flow statementsCash Flow StatementsStatement of Cash flow is a statement in financial accounting which reports the details about the cash generated and the cash outflow of the company during a particular accounting period under consideration from the different activities i.e., operating activities, investing activities and financing activities.read more.
Also, the Interest expense shown in the IncomeInterest Expense Shown In The IncomeInterest Income is the amount of revenue generated by interest-yielding investments like certificates of deposit, savings accounts, or other investments & it is reported in the Company’s income statement. read more Statement is the net number (Interest Expense – Interest Income)

Interest Coverage Ratio - Colgate

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Colgate has a very healthy Interest coverage ratio. More than 25x in the past three years.

# 29. Debt Service Coverage Ratio (DSCR)

What is DSCR?

Debt Service Coverage Ratio tells us whether the Operating Income is sufficient to pay off all obligations that are related to debt in a year. It also includes committed lease payments. Debt servicing consists of not only the interest but also some principal portion also is repaid annually.

Formula

Debt Service Coverage Formula = Operating Income / Debt Service

Operating Income is nothing but EBIT

Debt Service is Principal Payments + Interest Payments + Lease Payments

Example

Let us take a simple DSCR calculation example,

DSCR = EBIT / Debt Service = $500/$200 = 2.5x

Analyst Interpretation

  • A DSCR of less than 1.0 implies that the operating cash flows are not sufficient enough for Debt Servicing, implying negative cash flows.
  • This is a pretty useful matrix from the Bank’s point of view, especially when they give loans against property to individuals.

Colgate Case Study

Colgate’s Debt Service Coverage Ratio = Operating Income / Debt Service

Debt Service = Principal Repayment of Debt + Interest Payment + Lease Obligations

For Colgate, we get the Debt service obligations from its 10K reports.

Please note that you get the estimate of the Debt Service in the 10K reports.

For finding out the historical Debt Service Payments, you need to refer to the 10Ks prior to 2020.
DSCR calculations - Colgate

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Colgate 10K 2020, pg 46.

Debt Service Coverage Ratio (DSCR) - Colgate

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Debt Service Coverage Ratio or DSCR for Colgate is healthy at around 6.62x for 2020.

However, the DSCR has deteriorated a bit in the recent past.

You can click here for a detailed, in-depth article on DSCR RatioDSCR RatioDebt service coverage (DSCR) is the ratio of net operating income to total debt service that determines whether a company's net income is sufficient to cover its debt obligations. It is used to calculate the loanable amount to a corporation during commercial real estate lending.read more

External Liquidity Risk

#30 – Bid-Ask Spread

What is Bid-Ask Spread?

Bid-Ask Spread is a very important parameter that helps us understand how the stock prices get affected by the purchase or sale of stocks. The bid is the highest price that the buyer is willing to pay. Ask is the lowest price at which the seller is willing to sell.

Example

Let us take a simple Bid-Ask Spread calculationBid-Ask Spread CalculationThe asking price is the lowest price at which a prospective seller will sell the security. The bid price, on the other hand, is the highest price a prospective buyer is willing to pay for a security, and the bid-ask spread is the difference between them.read more example.

If the bid price is $75 and the asking price is $80, then the bid-ask spread is the difference between the ask price and the bid price.$80 – $75 = $5.

Analyst Interpretation

  • External market liquidity is an important source of risk to investors.
  • If the bid-ask spread is low, then the investors are able to buy or sell assets with little price changes.
  • Also, another factor of external market liquidity is the dollar value of shares traded.

Colgate Case Study

Let us look at Colgate Bid-Ask Spread.
As we note from the below snapshot, Bid = 78.61 and Ask = $80.30
Bid Ask Spread = 80.30 – 78.61 = 1.69

Colgate - Bid Ask

source: Yahoo Finance

#31 – Trading Volume

What is Trading Volume?

Trading volume refers to the average number of shares traded in a day or over a period of time. When the average trading volume is high, this implies that the stock has high liquidity (can be easily traded).  Numerous buyers and sellers provide liquidity.

Example

Let us take a simple Trading Volume example.

There are two companies – Company A and B. The average daily traded volume of Company A is 1000, and that of Company B is 1 million.

Which company is more liquid? Obviously, company B, as there is more investor’s interest, and traded more.

Analyst Interpretation

  • If the trading volume is high, then investors will show more interest in the stock that may help in an increase in the share price.
  • If the trading volume is low, then fewer investors will have an interest in the stocks. Such stock will be less expensive due to the unwillingness of investors to buy such stocks.

Colgate Case Study

Trading Volume - Colgate

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Source: Ratio Analysis (wallstreetmojo.com)

Let us look at the trading volume of Colgate. We note from the above graph that Colgate traded volume was at around 4.165 million shares. This is a fairly liquid stock.

Growth Analysis

The growth rate is one of the most important parameters when we look at analyzing a company. As a company becomes bigger and bigger, its growth tapers and reaches a long-term sustainable growth rate. In this, we discuss how sustainable growth rates are important.

#32 – Sustainable Growth

What is Sustainable Growth?

The company’s sustainable topline growth is one of the most important parameters for investors as well as creditors in ratio analysis. It helps the investor forecast the growth in earnings and valuations.

It is important to find the sustainable growth rate of the company. The sustainable growth rate is a function of two variables:

  • What is the rate of return on equity (which gives the maximum possible growth)?
  • How much of that growth is put to work through earnings retention (rather than being paid out in dividends)?

Formula

Sustainable Growth Rate Formula = ROE x Retention rate

Example

Let us take a simple Sustainable Growth calculation example.

Sustainable Growth Rate = ROE x Retention Rate = 20% x (1-0.3) = 14%

Analyst Interpretation

Colgate Case Study

Let us now look at the sustainable growth rate of Colgate. Sustainable. We note that the sustainable ROE as per the formula comes out to be around 133.2% in 2020. For all earlier years, it is in excess of 200% (which seems highly unlikely). Due to recent volatility in foreign exchange (leading to sales volatility) and buybacks done by the management (leading to an increase in ROE), sustainable growth is not making sense here.

Sustainable ROE - Colgate

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Ratio Analysis (wallstreetmojo.com)

 Conclusions

Now that we have calculated all 32 ratios, you should appreciate that ratio analysis includes learning about the company from all dimensions. A single ratio does not provide us with a full understanding of the company. All the ratios need to be looked at cohesively and are interconnected. We noted that Colgate has been an amazing company with solid fundamentals.

Now that you have done the fundamental analysis of Colgate, you can move forward and learn Learn Financial Modeling in ExcelLearn Learn Financial Modeling In ExcelFinancial modeling in Excel refers to a tool used for preparing the expected financial statements predicting the company's financial performance in a future period using the assumptions and historical performance information.read more (forecasting of Colgate’s Financial Statements). Don’t forget to look at these Finacial modeling tipsFinacial Modeling TipsFinancial modeling refers to the use of excel-based models to reflect a company's projected financial performance. Such models represent the financial situation by taking into account risks and future assumptions, which are critical for making significant decisions in the future, such as raising capital or valuing a business, and interpreting their impact.read more and also download financial modeling templatesDownload Financial Modeling TemplatesYou can download many financial modeling templates, including the Alibaba IPO model, Box IPO model, Colgate financial model, free cash flow to firm model, sensitivity analysis model, comparable company analysis model, PE and PE band chart.read more.

Reader Interactions

Comments

  1. Javi says

    Great gob Dheeraj, great article and usefull comments and data. I really appreacite if you could send me the template.

    Thanks

  2. Varsha Vivekanand Maindargi says

    Very useful and informative.

    • Dheeraj Vaidya says

      Thanks for your kind words!

  3. Voni says

    wow awesome, its took a lot of time to create this templates. . I am able to download the file from your email. Thank you for sharing this I am very appreciate for your work.

    • Dheeraj Vaidya says

      Thanks for your kind words!

  4. Nikhilesh Kumar Jha says

    Dear Sir
    You have given really appreciable study material and excellent explanation with example which is rarely provided.
    Thanks.

    • Dheeraj Vaidya says

      Thanks for your kind words!

  5. Lazaro Zengo says

    Thank you Dheeraj, this blog has helped me a lot. May almighty God bless you abundantly.

    • Dheeraj Vaidya says

      Thanks for your kind words!

  6. MUHAMMAD nasir says

    Dear Mr. Dheeraj, great work!

    Not much of a comment enthusiast, but being a humble finance/accounts professional really felt compelled to appreciate your willingness & zeal to share the financial knowledge gratis and at such great length.

    Cheers !

    • Dheeraj Vaidya says

      Thanks for your kind words!

  7. Manuel says

    Thank you Dheeraj, usefull article and comments and insights. I really appreacite if you could send me the template.

    Best, Manu

    • Dhanashire Rajesh says

      Please check your email. I’ve just sent the model.

    • Dhanashire Rajesh says

      Please check your email. I’ve just sent the model.

  8. Naveli Sharma says

    Please can you send me the excel templates?

    • Dhanashire Rajesh says

      Please check your email. I’ve just sent the model.

  9. Raluca says

    WOW….This is a very useful article. Is it possible for you to share the template with me?
    Thanks in advance.

    • Dhanashire Rajesh says

      Please check your email. I’ve just sent the model.

  10. Patrick Annancy Osei-Owusu says

    Wonderful job. very insightful.
    can i also get the excel template
    Thank you

    • Dhanashire Rajesh says

      Please check your email. I’ve just sent the model.

  11. Hicham riad says

    Hi .Great job but I am unable to download the ratio analysis templates, unsolved and solved. Can you email them to me. Email hichamriad@gmail.com.

    Thanks

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the model.

      • Jignesh says

        I tried several time, but not able to receive any file in my mail id. So could you plz send ratio analysis file in my mail id directly. jigneshkanani@hotmail.com

        Thanks for your Co-operation.

        • Rajesh Dhanashire says

          Please check your email. I’ve just sent the model.

  12. research says

    cant download the attached file,
    pls send me the template…….

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the model.

  13. Deepen says

    Hi Dheeraj,

    Thanks for the informative post. I appreciate your effort.
    It’ll be great if you can email the templates as I am not able to download it.

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the model.

  14. Helen says

    Hello Dheeraj,
    These articles are of great help. I really appriciate your job. It helped me a lot. It would be more helpful if you can share the excel templates as well.
    Best regards,
    Helen

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  15. abhi says

    hi,
    very well explained with simplicity.could u pls mail me all the templates files.
    Thanks a lot

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  16. eric says

    Hi Dheeraj,
    Great work, pls can you send me the excel template

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  17. sadaf says

    Hi Dheeraj can you please send me all the excel file for ratios, tried several time with download but doesn’t work, even wrote you an email on your email provided here and haven’t got any reply.

    I started with the Colgate Financial modelling and waiting for the ratio file so i can move ahead on that. Thanks and great work

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  18. Adebisi says

    Thanks for this. God bless you richly. Please send the the excel template for this.

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the model.

  19. Chandramouli says

    Good day, Dheeraj,
    Useful. To validate them with Excel, can you please send me the file? It does´t work through download.
    Thanks & Regards,
    Chandramouli

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  20. Khushal Bansal says

    Hi Dheeraj Sir
    I am unable to download the template. Please mail me the template at khushal1494.bansal@gmail.com.

    Thanks in Advance

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

    • Madhav says

      Hi Dheeraj,
      I am unable to download any of the template. Please mail me the template of Ratio analysis & Financial Modeling at knight.r201@gmail.com

      Thanks in Advance.
      Regards,
      Madhav

      • Rajesh Dhanashire says

        Please check your email. I’ve just sent the templates.

  21. ABDUL RAZZAQ says

    CAN YOU FORWARD ME THE TEMPLATE OF RATIO ANALYSIS AS TRIED IT COUPLE OF TIME, BUT DID NOT RECEIVE THE TEMPLATE YET.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  22. Yasser Zafar says

    Dheeraj,

    You have done a fantastic job in compiling the info for a beginner as well as a refresher. Really impressed by the blog you have put together. Thanks!

    Additionally I haven’t received the templates. Can you kindly share them with me?

    Many Thanks,

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  23. Ali says

    Please share template for ratio analysis. I have subscribed couple of time but did not receive your email.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  24. Payal says

    Hi Dheeraj,
    These articles are of great help. It would be very helpful if you can share the excel templates as well.
    Thanks

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  25. Nadan Duranovic says

    Great stuff! I have been looking for something like this for a while.
    Can you please send me excel templates to email?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  26. Cyn says

    Hello! Please email me the template. Your help is greatly appreciated. Thank you!

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  27. Cyn says

    Hello! Please share with me the Colgate’s Ratio analysis template. Thank you very much for sharing. Your help is greatly appreciated.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  28. Shalu says

    Hi Dheeraj, Excellent Job. Kindly share the templates.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  29. Shalu says

    Hi Dheeraj, Excellent Job. Kindly Email the templates.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  30. Omar says

    Could you please email me the templates.
    Thank you!

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  31. Chandradarshan Jain says

    hello Dheeraj,
    Can you please mail me the templates.
    Thank you!

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  32. Ori says

    Thanks for that. Can you please send me the templates?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  33. Ori says

    Amazing! thanks! would appreciate receiving the template.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  34. GAMAR SULIMAN says

    hi , amazing , can you please sned me the file.

    • Rajesh Dhanashire says

      Hi Gamar Suliman, Please check your email template for ratio analysis. Thank you….

  35. Steven says

    Hey Dheeraj!

    This is by far one of the best resources I have come across in my search of information. Thank you for all the time and effort you have put into these guides – it really means a lot to myself and the hundreds, if not thousands, of people that come across this gem.

    Could you please send over the excel templates? I’d love to dabble.

    Cheers,
    Steve

    • Rajesh Dhanashire says

      Hi Steven, Please check your email template for ratio analysis. Thank you….

  36. Okyeame Osei says

    Thanks Dheeraj Vaidya for the wonderful job. Please can you email me the templates

    • Rajesh Dhanashire says

      Hi okyeame Osei, Please check your email template for ratio analysis. Thank you….

  37. Megna says

    Hi Can you please Templates for Colgate ratios and model

    • Rajesh Dhanashire says

      Hi Megna, Please check your email template for ratio analysis. Thank you….

  38. Okyeame Osei says

    HI Dheeraj Vaidya, Thank you for the thorough illustration. Please can you email me the excel templates

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  39. hesty ratnasari says

    hi Dheeraj, thanks for this very useful information, Can you please share the excel template?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  40. charles oparah says

    Excellent presentation and you are selfless. Please send me the templates to
    coparah88@gmail.com

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  41. Yashna says

    Hi Dheeraj,

    Thank you for sharing the Ratio Analysis Guide. It is really helpful. Please may I have the excel templates.

    Regards
    Yashna

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  42. Rohit Garg says

    Hi Dheeraj, excellent article. Can you please share the excel templates for ratio analysis?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  43. Undraa says

    Hi Dheeraj,

    It is really good work for helping people. God bless you

    Can you send me the templates?

    Thank you

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  44. Undraa says

    Thank you so much, it was a really helpful article for me to build my first financial model. Can you send me the templates, if possible?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  45. kamruzzaman shuvo says

    Would you please send me the templates?
    1.Vertical analysis (common size analysis) : balance sheet and income statement only
    2.Horizontal analysis (Trend analysis) :balance sheet and income statement only
    3.Ratio analysis

    Thanks in advance.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  46. Raj says

    Hi Dheeraj,

    Great work.

    Is it possible for you to share the solved and unsolved templates with me please?

    And is it possible for you to send me the pdf format of the above material please?

    Regards,
    Raj

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  47. Aditya Jain says

    Great piece of work!!
    How did you learn in depth as you have IIT background and not commerce?

    Could you pls share excel files/templates?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  48. Pam says

    Dheeraj, Very comprehensive analysis with detailed definitions and examples. Appreciate if you could share the excel templates. Colgate was a great example. Great to share in new analyst training. Thank you.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  49. Chaitanya Srinivas says

    Dear Dheeraj,
    Thank you very much for sharing these concepts. Your understanding and explanations are of highest quality.
    Kindly share the templates at chaitanya.srinivas.certs@gmail.com
    P.S – It would be amazing if you can put up some video lectures. We would be more than happy to pay and learn from you…

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  50. GAURAV says

    SIR …
    THE DOCUMENT CANT BE DOWNLODED….
    KINDLY SEND ME THE SOLVED AND UNSOLVED EXCEL FILE …
    THAT WILL BE VERY HELPFUL….

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  51. GAURAV says

    YOU LINKED EVERY SECTION WITH ONE ANOTHER TO GET A BETTER UNDERSTANDING OF IT !!!! BUT GOT NO MAIL AFTER ENTERING THE ID ????

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  52. Kelvin says

    Thanks for sharing. Can I please get the spreadsheets

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  53. stefano says

    Great work Dheeraj !
    Receiving the template would be very welcome

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  54. stefano says

    GREAT JOB Dheeraj !
    Can you please send me the template? Big thanks!

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  55. Navin Raj says

    Hi Dheeraj

    May I also please have the ratio analysis template.

    Kind regards

    Navin

    • Rajesh Dhanashire says

      Hi Navin Raj, Please check your email template for ratio analysis. Thank you….

  56. Navin Raj says

    Hi Dheeraj

    Could I also please have the ratio analysis template.

    Thanks

    Navin

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the templates.

  57. Rizki says

    Absolutely useful! it would be perfect for me if maybe you could send the excel to my email :D

    • Rajesh Dhanashire says

      Hi Rizki, Please check your email template for ratio analysis. Thank you….

  58. Matt says

    Hi Dheeraj,

    thank you very much for posting this course. It is really helpful. Could you please send me the solved template for a cross check?
    Also, I have two questions:
    1) How do you calculate the denominator values for the DSCR?
    2) Do you make any corrections in assets or liabilities calculating the debt ratio? I calculated it with given values and averages, but I always come up with results that slightly differ from the ones you posted.

    Thank you very much for your help

    best regards

    Matt

    • Rajesh Dhanashire says

      Hi Matt, Please check your email template for ratio analysis. Thank you….

  59. Dr Ganesh Sanap says

    Wonderful Article…Being a healthcare consultant.. I am interested in learning Finance. your articles are very useful. Thanks a Ton.

    Kindly share me related excel templates.

    • Rajesh Dhanashire says

      Hi Dr Ganesh Sanap, Please check your email template for ratio analysis. Thank you….

  60. Michael Perez says

    Great article can you please share your template?

    • Rajesh Dhanashire says

      Hi Michael Perez, Please check your email template for ratio analysis. Thank you….

  61. Prashant says

    Hey! Can you please provide the excel sheet? I’ve tried entering my email address in the field but haven’t received the excel sheet. email ID: prashantsingh19a@gmail.com

    Thanks

    • Rajesh Dhanashire says

      Hi Prashant, Please check your email template for ratio analysis. Thank you….

    • Rajesh Dhanashire says

      Hi Carlina, Please check your email template for ratio analysis. Thank you….

  62. Nathan Chen says

    Great job. Would you be kindly to sent me the excel templates. Thank you.

    • Rajesh Dhanashire says

      Hi Nathan Chen, Please check your email template for ratio analysis. Thank you….

  63. raksha says

    Hi Peter
    Excellent article. I was not able to download the excel. Can you please mail me. My email is raks.m888@gmail.com

    • Rajesh Dhanashire says

      Hi Raksha, Please check your email template for ratio analysis. Thank you….

  64. Imran says

    Hi Dheeraj,
    Wonderful work.
    Could you please email me the templates.
    Thank you!

    • Rajesh Dhanashire says

      Hi Imran,Please check your email template for ratio analysis. Thank you….

  65. Athar Butt says

    Hi Dheeraj. Excellent Work. Please continue with this great work God bless you. Can you let me have the Template plz. Thanks

    • Rajesh Dhanashire says

      Hi Athar Butt, Please check your email template for ratio analysis. Thank you….

  66. Luau albraim says

    Wonderful…This is a very useful article. Is it possible for you to share the template with me?

    • Rajesh Dhanashire says

      Hi Luau Albraim, Please check your email template for ratio analysis. Thank you….

  67. Sandeep Kumar Gupta says

    You are a good teacher.

    Whatever I read till today is excellent and informative.

    Is the course material downloadable?

    Sir, can you please send me the Ratio Analysis Solved and Unsolved Excel!

    Thanks,
    Sandeep.

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  68. Hossam Eldin says

    thank you v.much MR.Dheeraj it is v.helpful
    may i get the templates.please. thank you again

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  69. Shao says

    Hi Dheeraj,
    Great guide! There are a lot of useful things that I learnt from your posts.
    Could you please email me the templates. And the valuation for Alibaba?
    Thank you!!

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  70. nay zaw soe says

    Sir, Thanks for your explanation , I am new one for your website, could you send excel template please?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  71. GURSIMRAT SINGH says

    Thanks for this article , could you please share the templates ???

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  72. Adebisi says

    Thanks for these amazing analysis. Could you please send me the excel templates?

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  73. Vikas Kumar Singh says

    Hi Dheeraj,
    Very nice explanations, it is very informative. can you please send me the excel files for these.
    Thanks

    • Rajesh Dhanashire says

      Please check your email template for ratio analysis. Thank you….

  74. Kashif says

    very nice work indeed sir,kindly forward me all the notes and templates on my email with interpretation sir.
    (email id:enggkashif03@gmail.com)
    Thanks in advance

    • Rajesh Dhanashire says

      Hi Kashif, Please check your email template for ratio analysis. Thank you….

  75. Cristian Badea says

    Hi Dheeraj, very useful article!
    Could you please email me the Excel file?
    Thank you!

    • Rajesh Dhanashire says

      Please check your email. I’ve just sent the model.

  76. Cle Royal says

    Hi Dheeraj!
    I agree with all that this is amazing! I will share much of this with small business entrepreneurs.
    I would welcome the excel templates.
    Thanks!

    • Dheeraj Vaidya says

      Thank you! Have sent the templates. Please let me know if you received one.

      • Vishal says

        Hi Dheeraj, Thanks for sharing such an awesome explanation Fundamental Analysis.
        Can you please send me the templates of the same.

        • Rajesh Dhanashire says

          Hi Vishal, Please check your email template for ratio analysis. Thank you….

      • boniface says

        Kindly send to me the template in excel

        • Rajesh Dhanashire says

          Please check your email template for ratio analysis. Thank you….

      • Emperor says

        Weldone ….please can I have the template for ratio analysis sent to my mail

        • Rajesh Dhanashire says

          Please check your email template for ratio analysis. Thank you….

  77. Ryan says

    Hi Dheeraj,

    I wrote down something a couple days ago and it seems like my comment hasn’t been through so i was asking if you were ok to send me the templates you have regarding the above mentioned subject.

    Thank you in advance !!!

    Ryan,

    • Dheeraj Vaidya says

      Hi Ryan, can you please check your email. Have already sent the templates.

  78. AMARILDO says

    Apreciaria receber os modelos por e-mail

    • Dheeraj Vaidya says

      Please check your email for the templates.

  79. Pedro says

    Hi Dheeraj,

    very good and exhaustive job.
    I’m new on your site and i’m appreciating the contect. It looks much better than other similar sites.
    Could you please email me the excel templates?

    Thanks

    • Dheeraj Vaidya says

      Thanks Pedro! have mailed you the templates for your perusal.

  80. nikhil says

    Nice explanation. Kindly send me the Ratio Analysis Solved and Unsolved .

    • Dheeraj Vaidya says

      Hello Nikhil, can you please check your email.

  81. Farrukh says

    Hello Mr. Dheeraj
    You are doing an amazing job
    Can you please send me the template for this case study,
    would be thankful.

    Best Regards

    • Dheeraj Vaidya says

      Hello Farrukh, please check your email for the templates.

  82. Parag says

    Thanks for posting the article ! Can you please share the templates to try it out?

    • Dheeraj Vaidya says

      Have just sent the templates Parag! please check.

  83. Ryan says

    Hello Dheeraj, thanks for your precious help may i ask you to forward me the template of this ratio analysis.

    Thanks a lot!

    • Dheeraj Vaidya says

      done Ryan!

  84. Emmeldah Mwanakanje says

    Thank so much for the precise write up. I have learnt a lot. I am doing self study and would like to get in to Financial Consultancy. May you please send the excel templates to my email.

    • Dheeraj Vaidya says

      done! Thanks Emmeldah!

      • Abhishek Dey says

        Very well explained .Can you share the excel template.

        • Rajesh Dhanashire says

          Please check your email template for ratio analysis. Thank you….

  85. Quam says

    WOW….This is a very useful article. Is it possible for you to share the template with me?

    • Dheeraj Vaidya says

      thanks Quam! Have sent the templates.

  86. Jay says

    Nice course Dheeraj could you send me the spreadsheet

    • Dheeraj Vaidya says

      thanks Jay. Please check your email.

  87. Rishi says

    Hi Dheeraj,

    Great article and very helpful. I would be very grateful if you could send me the excel file.
    Thank you.

    • Dheeraj Vaidya says

      Thakns Rishi! Please check your email for the ratio analysis templates.

  88. Subin says

    Hi Dheeraj
    It’s a very informative post . Can you please send me the Ratio Analysis templates.

  89. Amberlene joseph says

    Hello Dheeraj,

    This is a lifesaver! . Can you send me the excel files?

    Thank you

    Amber

    • Dheeraj Vaidya says

      :-) Amberlene! please check your email for the templates.

  90. Ankit khandelwal says

    Good Job…Can you send me templates (excel format) of these ratio analysis with interpretation.

    • Dheeraj Vaidya says

      Thanks Ankit! Please check your email for the templates

  91. M.R. Parthasarathy says

    Thanks, Mr. Dheeraj. Excellent blog. Very informative and easy to grasp.

    Appreciate if you could share the excel template of Ratio Analysis

    • Dheeraj Vaidya says

      Thanks Mr. Parthasarathy for the encouragement! Please check your email for the ratio analysis files.

      • Ankur Banka says

        Nice one. Can you pls share the templates

        • Rajesh Dhanashire says

          Please check your email template for ratio analysis. Thank you….

        • Rajesh Dhanashire says

          Please check your email template for ratio analysis. Thank you….

  92. Samuel Akinola says

    Hi Dheeraj, many thanks for the lesson. could you please send me the templates. Many thanks once again..

    • Dheeraj Vaidya says

      Thanks Samuel! Please check your email for the templates.

  93. Debanjan C says

    Very informative indeed !
    Could you please help out with the information , how to calculate basis, diluted & cash EPS. how is it important to predict a stock price.

  94. Herciu Cristian says

    Hello…Dheeraj…really a very good and interesting article….would you be so kind to send me the financial analysis templates. Thanks a lot…Have a very nice day…

    • Dheeraj Vaidya says

      thanks Herciu! Have sent the financial analysis templates to your email id.

  95. john sam says

    wow more than wealthy , thanks very much

    hope to send me the ratio exceed sheet
    i will be so glad

    • Dheeraj Vaidya says

      Thanks John :-) Please check your email for the files.

  96. tena.us says

    many thx for ur precious effort hope u can send me the excel files asap

    • Dheeraj Vaidya says

      thanks Tena. Please check your email for the templates.

  97. Samuel says

    Dear Dheeraj,

    I’m a big fan of you. Many thanks for the free courses and hints.
    Really helpful and mind blowing.

    Cheers.

    • Dheeraj Vaidya says

      thanks Samuel! :-)

  98. Krunal Salwe says

    Best content I’ve come across in my 3 months of MBA journey…thank you so much

    • Dheeraj Vaidya says

      thanks Krunal!

    • igor Cincovic says

      Great material. Please can you send Excell spreadsheets which are editable?
      Thank you
      Igor

      • Dheeraj Vaidya says

        Please check Igor if you have received the templates. If not, please ping me.

  99. Edwin Kan says

    Good Morning Dheerraj,

    Your website in the most informative I have found. I want to be a value investor, I have done lots of search but did not find good site to evaluate a stock before I pull the trigger.

    I do not understand a company with negative equity, or higher current ratio and the price of the stock is soaring. I see company with higher debt than equity but investor are buying these stocks.

    Do you have a list of ratios or other parameter to asses an investment?

    How reliable are those ratios found in google finance or many other sites.
    Look forward to your comments.

    Thanks
    Edwin Kan

    • Dheeraj Vaidya says

      Hi Edwin,

      thanks for your comment. We cannot just look at one ratio and then make a judgment on its valuation. Like companies with negative equity or higher current ratio, their other set of fundamental ratios may be sound or it could be that in future there is strong case that they would improve.

      Additionally, please note that a good “fundamental” company may not necessarily mean that it’s a BUY. Valuation should be also reasonable. You may use PE ratio, EV to EBITDA Ratio or many other Relative Value Ratios for making such judgments.

      Google finance and other similar websites do provide data, but I tend to do my own set of calculation. The primary reason is that most database providers have a standard definition of their calculating ratios, whereas, each company may have a different set of reporting financials. Overall it becomes confusing if I take it from a database.

      thanks,
      Dheeraj

  100. Salil Jana says

    Hi Dheeraj,
    What u r doing is incredible. Helping students and professionals to reach their goals. I salute u sir.
    It would be a great help if u can please provide the spread sheet.

    Thanks
    Salil

    • Dheeraj Vaidya says

      thanks Salil for your kind words! have sent you the spreadsheet of financial analysis.

  101. Victor says

    You are simply so Awesome! You are doing a great job for the investing community

    Sir, can you please send me the Ratio Analysis Solved and Unsolved Excel!

    Thank you

    • Dheeraj Vaidya says

      thanks Victor! please check your email for the solved unsolved excel.

  102. Miguel Aragão says

    Grear Job Dheeraj!
    Can you please send me the file?

    Thanks

    • Dheeraj Vaidya says

      thanks Miguel! please check your inbox for the files.

  103. EVI says

    Hi, Very usefull article
    Can you please provide me with the Excel templates? Thank you very much!

    • Dheeraj Vaidya says

      thanks EVI. Can you please check inbox for the templates.

  104. Vatsalya M says

    Surely, a great article man. Looking forward to read your articles again.

    • Dheeraj Vaidya says

      Thanks Vatsalya!

      • roy says

        Hi Dheeraj,

        Great works from you. Could you please email me the template so that i can understand this a bit better. thank you so much

        • Dheeraj Vaidya says

          Thanks Roy! please check your email for the templates.

    • Niranjan says

      Amazing article.Can you share spreadsheet for reference.

      • Dheeraj Vaidya says

        thanks Niranjan! Have sent you the ratio spreadsheet

  105. Mohammed Nabil says

    Hi Sir,

    Can you email me a copy of the ratio template?

    Thanks

    • Dheeraj Vaidya says

      done! please check.

  106. mahmoud m mubaslat says

    Hi Dheeraj
    good day
    its amazing
    Could you please email me the template
    i already bought the 99 courses online,non of them listing the full ratio analysis
    thanks

    • Dheeraj Vaidya says

      thank you! Please check your email for the details.

  107. Kishore Kumar says

    Great work sir.

    Knowledgeable material for freshers like me to begin with.

    Can you please share me the Ratio Analysis Solved and Unsolved Excel for practise.

    Thank you

    • Dheeraj Vaidya says

      thanks Kishore! Please check your email for the templates.

  108. Ricky Young says

    • # 24. Leverage Ratio or Debt to Equity Ratio Analysis

    one of public company in Indonesia uses formula:
    (total Liabilities – Cash & Cash Equivalents) / Total Equity

    Please advice for the discrepancy.

    Tks and brgds
    RK

    • Dheeraj Vaidya says

      Hello Ricky, I am not sure why will they do so.

      Total Liabilities = Debt + Equity. So in this case, the numerator becomes Debt + Equity – Cash and Cash Equivalents. For calculating debt to equity, numerator should contain only the Debt part.

      Maybe you could consider a modified version, wherein you may look at (Total Debt – Cash and Cash Equivalent) / Total Equity. The numerator is actually net debt. In this case, we assume that cash can be used to pay a part of the debt.

      Best,
      Dheeraj

  109. Aung Paing Paing says

    Hi Mr. Dheeraj, what a great work!!! It would be great if you could send me the excel spreadsheet. Thank you.

    • Dheeraj Vaidya says

      thanks Aung. Please let me know if you have not received it yet.

  110. Pradeep Kumar Pandey says

    Hi Dheeraj,
    The article mentioned on ratio analysis is very useful and practical.
    Can you please send me the template as I’m unable to download the same.

    • Dheeraj Vaidya says

      Thanks Pradeep. Please let me know if you have not received it yet.

  111. Pradeep Kumar Pandey says

    Hi Dheeraj,
    I am an MBA in finance and have 5 years of experience spread across securities and retail banking and just joined as an RM- corporate real estate,composite banking solution wholesale banking with one of the leading bank of India, I was wondering as to what skill sets do I need to possess to Wade into mid market segment or large corporate, wholesale banking as I don’t have MBA from top-notch ivy league college.
    Also let me know if needed to work in particular department /industry to gain the requisite experience to land up a job in mid market or large corporate in wholesale banking as I can see almost all of them possess degree from tier 1 college.
    Would really appreciate the career guiding feedback.

    • Dheeraj Vaidya says

      Hi Pradeep, I think since you are already working with a leading bank in India, guess your work experience and growth within the bank will take you to the higher level.

  112. tena says

    hi plz i need ur material :(

    • Dheeraj Vaidya says

      done Tena. Please check your email.

  113. ridhi says

    Please send the excel sheets to me. Thanks

    • Dheeraj Vaidya says

      done Ridhi! Please check your email.

  114. Govind says

    first of all a lots of thanks for lovely website. i need template ratio analysis for practice . can u please provide template ratio analysis . my email id is gsdav6@gmail.com. once again i would like to thanks for helping.

    • Dheeraj Vaidya says

      already done. Please let me know if you have not received it yet.

  115. Kamal Arora says

    This is amazing, could you please share the template with me.

    Thanks

    • Dheeraj Vaidya says

      thanks Kamal. Please let me know if you have not received it yet.

  116. GUISSER says

    Excellent work, deep explanation and high focus.

    Can you send me the template and the article

    Thank you

    • Dheeraj Vaidya says

      thanks Guisser! Hope you have received the templates.

  117. Davood says

    Hi Dheeraj,

    Many thanks for your useful course. Please send me financial analysis template.

    Regards

    • Dheeraj Vaidya says

      thanks Davood! Hope you have received the templates.

  118. Manik says

    Thank you for the great lesson.can you send me solved and unsolved templates.tks

    • Dheeraj Vaidya says

      thanks Manik! Hope you have received the templates.

  119. David says

    great article. could you please send the templete, thanks

    • Dheeraj Vaidya says

      thanks David. Please let me know if you didn’t receive the templates.

  120. David Osinowo says

    This is amazing with a lot of simplicity. please kindly send the complete template to me.
    Thanks.

    • Dheeraj Vaidya says

      thanks David! Please let me know if you didn’t receive the templates.

  121. Kevin says

    Hi Could you please email me the templates for ratio analysis

    • Dheeraj Vaidya says

      Hi Kevin, Please let me know if you didn’t receive the templates yet.

  122. KP SRIKANTH says

    This content on financial ratios is best I have come through in internet,
    One thing I did not understand is whats the difference between credit sales and account receivables.
    Both numbers represent one same thing is that payments would be received by company in future.
    So what is different

    • Dheeraj Vaidya says

      Hello,

      Credit Sales leads to accounts receivables. Accounts receivables is basically a cumulative credit sale which is yet to be recovered to date.
      for example, in 2016 – Credit Sales was $100 and in 2017 Credit sales was $200. Also, assume that none of the credit sales were recovered as cash.
      For 2016, Credit Sales = $100; Accounts REceivables = $100
      For 2017, Credit Sales = $200, Accounts Receivalbes = $300 ($100 + $200)

      Hope this clarifies.
      Best,
      Dheeraj

  123. Vu Nguyen says

    Hi Dheeraj,

    Thank you so much for your great effort. I really appreciate the valuable sources that you have shared with us. This blog is incredible, and you are just amazing.

    By the way, could you please send me the Colgate Ratio Analysis Excel Template (both solved and unsolved ones)? Again, thank you so much for your contribution and your guidance.

    I look forwards to hearing from you soon.

    Best regards,
    Vu

    • Dheeraj Vaidya says

      thanks Vu Nguyen! Please let me know if you haven’t received the templates yet.

  124. Harvinder says

    Really good stuff Dheeraj…The download doesnt work. Can you send me the templates please ?

    • Dheeraj Vaidya says

      Thanks Harvinder! Please let me know if you haven’t received the ratio analysis files yet.

  125. SRINIVASA says

    Hi,
    Kindly mail me the analysis.

    Regards.

    • Dheeraj Vaidya says

      done!

  126. Asif Ismail says

    Hi Dheeraj

    it is very nice and fully elaborated

    can you send the templates please

    wish you all the best

    • Dheeraj Vaidya says

      thanks Asif. Please let me know if you still haven’t received the files.

  127. Asif Ismail says

    Very interesting and fully documented

    • Dheeraj Vaidya says

      thanks Asif!

  128. Cindy says

    Hi Dheeraj!

    This is amazing!
    Could you please email me the templates.
    Thank you!

    • Dheeraj Vaidya says

      Hi Cindy, please check your emails for the ratio analysis excel sheet.

      • sachin rao says

        could you pls mail it to me too. Thnaks

        • Dheeraj Vaidya says

          Please let me know if you still haven’t received the files.

      • obulreddy says

        hi dheeraj vaidya sir i am a big fan of u sir i would like to tnq u, sir if U donT mine can u send me US CMA Materials and which one is best for CMA EXAM Point ofu

        • Dheeraj Vaidya says

          Hi, unfortunately, i do not have much material related to CMA Exam.

      • Priyanka Jain says

        Hi Dheeraj,
        Can u plz send me financial statement analysis templates as well as working notes.

        Thank you in advance

        • Dheeraj Vaidya says

          done Priyanka!

    • Onyeka says

      Please can l get a template of the financial ratio analysis sheet.

      • Dheeraj Vaidya says

        done Onyeka! please check your inbox.

  129. isaac says

    thank you very much your material is very educative ,is it possible to send spreadsheets which are editable for me to practice im not good with the spreedsheet

    • Dheeraj Vaidya says

      Hi Isaac, the excel sheets are editable. You can modify and check all the links and formulas.

  130. Dion says

    Hi Dheeraj, usefull article and comments. can you please send me the excel file? Thank you so much. Have a nice day Dheeraj

    • Dheeraj Vaidya says

      Hi Dion, have sent you the sheet.

  131. Bhavna Katre says

    Hi Dheeraj, Many thanks for this article! Please share financial analysis solved and unsolved templates.

    • Dheeraj Vaidya says

      Hi Bhavna, i have just added you to the mailing list. you should receive the files shortly.

      • Sanjay says

        Hey Dheeraj, request you to send a copy to me as well

        • Dheeraj Vaidya says

          done Sanjay! please check.

  132. Eric Ayensu says

    Good morning Dheeraj, thanks for the great effort you are putting in to help some of us.
    I would be most grateful if you could send me the templates.

    Thank you

    • Dheeraj Vaidya says

      Hi Eric, please check your mail for financial analysis excel template.

  133. Eric Ayensu says

    HI Dheeraj,
    thanks very much for this great work, i would be most grateful if you could send me the solved and unsolved template

    eric

  134. ALAA says

    Wonderful Sir,

    Can you please send me the template as well

    • Dheeraj Vaidya says

      Hi Alaa, have sent the templates. Please check

  135. Artem says

    Dear Dheeraj,
    Thank you very much for such an extensive guide!
    Could you please prompt me in what resources could I analyse industry and typical fin ratios, BS, P&L structure for the certain industry for free?
    Also could you please tell some database where it is possible to find financial statements of the company, if it is not public.
    Thank you for your answer in advance.

    • Dheeraj Vaidya says

      Hi Artem, you can refer to Yahoo Finance, Google Finance for such information. If the company is not public, then very difficult to get the details for free.

  136. Jai Jain says

    Great lesson, can you send me solved and unsolved templates.
    Sir, can you please send me the Ratio Analysis Solved and Unsolved Excel!
    Thanks!

    • Dheeraj Vaidya says

      Hi Jai, please check your email for the same.

  137. Anton Fernando says

    Great work. I’m a fan of your work. Please, can you email me the excel template.
    regards
    Anton Fernando

    • Dheeraj Vaidya says

      Hi Anton, have sent you the ratio analysis templates.

  138. Ahmed says

    Dear Sir Dheeraj,

    you have been doing a great job, I humbly request if you could forward me the template of this ratio analysis. Thanks a million

    • Dheeraj Vaidya says

      Done Ahmed. Please check.

  139. Ahmed says

    Dear Sir Dheeraj, thank you so much for the hard work you are simply second to none and to continuously share the greatest wealth of your knowledge with others is appreciated in the strongest terms that I can’t even explain. It is almost impossible to come across people like yourself who is equipped with greatest knowledge yet so humble and hardworking in sharing this great wealth. I admire your hardwork and knowledge. You are great.

    • Dheeraj Vaidya says

      thanks Ahmed for such kind words :-)

  140. Ravi Agarwal says

    Hellow Dheeraj,
    Thanks for this tutorial, it is very useful! I would like to know if you have the supporting models too? I did not find them on this page. I would like to have for my own practice and consumption. I will be grateful if you kindly share the solved and unsolved versions of these models.
    Best regards,
    Ravi

    • Dheeraj Vaidya says

      Hi Ravi, please check your email. I have just emailed you those.

      • Ramtej Bolisetty says

        Hi Dheeraj,
        Kindly send it to me too. Thank you.

        • Dheeraj Vaidya says

          Thanks Ramtej! Please let me know if you haven’t received the templates yet.

  141. Olivier says

    Great job Sir,

    Can you please send me the template as well

    • Dheeraj Vaidya says

      Done Olivier!

  142. absar says

    Many thanks wonderful explanation..great work keep it up

    • absar says

      Also could you please send me the template ..many thanks in advance

      • Dheeraj Vaidya says

        Hi Absar, have sent the ratio analysis excel sheets. Please check.

    • Dheeraj Vaidya says

      thanks Absar!

  143. Julia says

    Have been searching for sth like this for long. And it’s even better that I could have expected it to be!
    Thank you! This guide is really the most comprehensive.
    And can I please have the excel template?

    Thanks a lot again.
    Julia

    • Dheeraj Vaidya says

      thanks Julia :-)
      Have sent an email with the templates. Please check.

  144. Rita Obu says

    Dear Dheeraj,

    This is an excellent tutorial. Very easy to understand and easy to navigate. Thank you for your generosity. Please send me the Excel templates I would really appreciate it.

    Best Regards

    • Dheeraj Vaidya says

      thanks Rita! please check your email for the ratio analysis templates.

  145. ANUM says

    can you please provide the excel template

    • Dheeraj Vaidya says

      Done Anum!

  146. jk pahuja says

    Nice way of presentation
    .

    • Dheeraj Vaidya says

      thanks!

  147. Selven says

    Good day Dheeraj,

    Great work, very useful and explained very succinctly. Please may I have a pdf version of the explanations and interpretation of the ratios?

    Sincere thanks

    regards
    Selven

    • Dheeraj Vaidya says

      thanks Selven. I have sent the excel templates at your email id.

      • Ifeanyi Francis Osegbue says

        Very informative Sir,

        Can I get the detailed excel template?

        • Dheeraj Vaidya says

          Hi Ifeanyi, please check your email for the templates.

  148. Khitindra says

    Please share the templates
    Thanks

    • Dheeraj Vaidya says

      done Khitindra!

      • Esh says

        Hi Dheeraj

        Very much appreciated the commentary etc.
        Kindly requesting you to e-mail me the Excel templates including calculations please.
        Thank you.
        Esh

        • Dheeraj Vaidya says

          Done Esh. Please check your email.

  149. Viji says

    Hi,

    Thank you for the detailed writeup. Could you provide me with the templates?

    Viji

    • Dheeraj Vaidya says

      Hi Vishwas, please check your email for the templates.

  150. Olga says

    Dear Dheeraj,

    Can you please provide me with the Excel templates? Thank you very much!

    • Dheeraj Vaidya says

      Hi Olga, please check your email for the same.
      Best,
      Dheeraj

  151. Francesco says

    Dheeraj, I must say how grateful I’m for this page.

    I had my 1,5y internship at investment banking and your lessons here were more usefull than those over that period. Many thanks and Congrats for your job that enables us not only to perform better at this industry but also to get a deep joy of doing this job.

    I’m really enjoying every class related to IB.

    Sincers greetings from Colombia!

    • Dheeraj Vaidya says

      thanks Francesco!

      It’s heartening to see that you’ve found these resources useful.

      Best,
      Dheeraj

  152. Andres says

    Hi Dheeraj i submitted my email to get the Colgate Template and also for the Terminal Value exercise but i haven’t received anything, could you check this please?

    • Dheeraj Vaidya says

      Hi Andres, i have resent you the templates. Please check.

      • Manish Chandran says

        Hey Dheeraj excellent work man…I too need the template.

        • Manish Chandran says

          Ok I got it

        • Dheeraj Vaidya says

          Hi Manish, please check your email for the templates.

  153. Sami Tasar says

    Dear Dheeraj,

    Can you please provide me the Excel templates? Thank you very much!

  154. Rakesh Kumar says

    Hi Dheeraj, very usefull post. To validate them with Excel, would you please send me the file? Thank you. Have a nice day.

    • Dheeraj Vaidya says

      Hi Rakesh, please check your email. I have send the excel files to you.

  155. Ravi says

    This is amazing work. Could you please send the financial analysis template. Would you have a modeling template too that links all 3 statements or just Income Statement. Thanks for providing this.

  156. Jason Zhang says

    Well done! Dheeraj.

    Could you please email me all the templates?

    Thanks,
    Jason

  157. Biju Mathews says

    Hi Dheeraj,

    Could you please send me the templates.

    Thanks so much. Awesome.

    Biju Mathews

    • Dheeraj Vaidya says

      thanks Biju. Please check your email for the ratio analysis templates.

  158. Gonc says

    Dear Dheeraj,

    Its always a pleasure to visit your site to get some good inspiration on what books to read.
    Could i request for the financial analysis templates. Thanks!

    • Dheeraj Vaidya says

      Hi Gonc, thanks! have emailed the financial analysis templates.

  159. Samyak says

    HI Dheeraj,

    Excellent article, Can I please get the template?

    • Dheeraj Vaidya says

      Hi Samyak, please check your email for the templates.

  160. Mariya says

    Hi,
    Thank you for this tutorial, I find it very useful! I just would like to ask where is the model have you calculated the ratios? I did not find them anywhere. I wou;d like to make a comparison with mine which I have worked on the unsolved version. And I have some more questions. May I ask them here or it’s better via e-mail, privately?
    Thank you!
    Mariya

    • Dheeraj Vaidya says

      Hi Mariya, i have sent you both the solved and unsolved excel sheets. Please let me know if you have any questions.

  161. Osegbue Ifeanyi Francis says

    Hi Vaidya
    Can you assist on earning management template?

  162. Kunal Thakkar says

    Hi Dheeraj,

    Thanks a lot.. Good stuff.
    Can you please share the excel model?

    Regards,
    Kunal

    • Dheeraj Vaidya says

      thanks Kunal. Please check your mail for the templates.

  163. Harman says

    Hi Dheeraj, very useful article. Can you send me the file.

    • Dheeraj Vaidya says

      Hi Harman, please check your email for the templates.

  164. Pradeep says

    Great compilation Dheeraj. Thanks for this, can you please mail the excel template?

    • Dheeraj Vaidya says

      Hi Pradeep, please check your email for the same.

      • disha ghedia says

        This is wonderful analysis. Can you please share the template

        • Dheeraj Vaidya says

          Hi Disha, i have just sent you the sheet.

  165. Saruul says

    Hi, this course was great, very understandable. Thank you for your hard work :).

  166. farid es says

    Very nice Guide and so thanks. I would request for providing excel templates

    • Dheeraj Vaidya says

      thanks Farid. I have just sent you the templates!

      • ganesh srini says

        Hi Dheeraj :
        i am a finance professional myself, and i find this outstanding and amazing. so much of knowledge and hard work. god bless you.

        may i request the excel templates for my learning purposes?

        ganesh srini

        • Dheeraj Vaidya says

          Hi Ganesh, I have sent the files on your email id.

          Thanks,
          Dheeraj

  167. Mohamed Farouk says

    Hi Sir/Dheeraj
    Excellent Information, Could you please send me the template and PDF for this lesson on my email Please ? Thank you so much in advance.

    • Dheeraj Vaidya says

      Hi Mohamed, have sent you the excel sheet. I do not have the PDF lesson on this.

  168. Prince says

    Hello Dheeraj Vaidya,
    Undoubtedly, you effort is worth being appreciated. I am not being able to download the templates of financial ratio analysis. If you don’t mind, can you please send me those templates?

    • Dheeraj Vaidya says

      thanks Prince. Please check your email for the templates.

  169. Simo Benchellal says

    Dear Dheeraj,

    Great job, deep explanation and great article. Thank you for the effort.

    Could you please send me the templates (solved & unsolved) and PDF of this article?

    • Dheeraj Vaidya says

      thanks Simo. Please check your mail for the templates.

  170. Gagandeep says

    Hello Dheeraj,
    Thank you very much for sharing your research here. Many students like me who have interest in financial modeling get to learn a lot of things from this blog.
    But for practice i am unable to download the templates. Can you please send me the templates on my E-mail ID

    • Dheeraj Vaidya says

      Hi Gagandeep, have sent you the excel sheet. Please check. Thanks!

  171. Sree says

    Fantastic Job!! Very useful article

  172. Abraham George says

    Excellent post Dheeraj. Kudos to your hard work in educating fellow professionals. Thanks a lot..!

  173. Aditya Biradar says

    Thanks for giving great lesson… Plzz Send ratio analysis solved and unsolved examples

    • Dheeraj Vaidya says

      Hi Aditya, please check your email. Have just sent you the templates.

  174. Ashish says

    Hi Deeraj

    Can you please send me the templates?

  175. George says

    Hi Dheeraj,

    Simple perfect the work you have done on Ratio Analysis / Financial Statement Analysis

    Do you have the pdf version ? Pls email this

    George
    Athens -Greece

    • Dheeraj Vaidya says

      Hi George, thanks for the appreciation. I do not have the pdf version. however, i have sent you the excel sheets.

      • Gurdeep Singh says

        can you send the same on my email ID

        • Dheeraj Vaidya says

          Hi Gurdeep, have sent you the sheet.

  176. NIZAMUDDIN KHAN says

    Hi Dheeraj, can you please send me the Ratio Analysis Solved and Unsolved Excel!

    • Dheeraj Vaidya says

      Hi Nizamuddin, please check your email for the templates.

  177. Sahil Bhatt says

    Really great information. In-depth guide.
    Can you please send the Excel file on my id!

    • Dheeraj Vaidya says

      thanks Sahil!. Please check your email for the fundamental analysis templates.

  178. issifu says

    ver grateful

      • Abideen says

        This is a great analysis.

        Thanks So much. Can I get the excel copy.

  179. mutinta Maluba says

    Kindly send me a detailed Ratios in a sheet

  180. Paresh says

    Dear Dheeraj, Your piece of work is one of the finest, simplest and most comprehensive one. Very easy to understand and apply. Please keep up your good work.

    Can you please send me the unsolved and solved excel sheet to complete my learning since I am unable to download the same from site.

    Cheers!

  181. George Papadopoulos says

    Hello Mr Dheeraj,again amazing work from you.I am student and i want to ask you an analyst question.What means that during 5 years example (2005-2010),a company has a decrease of 5% at non current assets,and an increase of 5% at current assets?

  182. Mika Abraham says

    Hi Dheeraj,

    Thank you very much for sharing Creator’s knowledge and make it simple for us to understand!! May God bless you!!

      • Barbara Paong says

        Hi Dheeraj,
        Thank you very much for sharing. Could you please send me all the Excel Templates together with pdf to my email

        Best Regards,
        Barbara

          • Jose salazar says

            Awesome work, could you please provide the excel template?

          • Dheeraj Vaidya says

            Done Jose. Please check.

      • Emmanuel says

        Hello Dheeraj, can you kindly forward me the documents, i will really appreciate it. Tried downloading the files you posted on the site, but its not just downloading.

        Regards.

        • Dheeraj Vaidya says

          Hi Emmanuel, Please Check your email id for the templates.

  183. SV says

    Hi Dheeraj

    Can u check if Did correct ratio calculations , I can send you my work
    Interpretation I am learning how to write, if you can , it would be great

    • Dheeraj Vaidya says

      Sure.

  184. prashanto mukherjee says

    Awesome explanation,I must say you have really put in some great effort for explaining jargons of fundamental world.
    Thank you so much and look forward to more of knowledge sharing articles from you.
    It would be great if you can send over templates on my email id.

    • Dheeraj Vaidya says

      Hi Prashanto, please check your email for the same.

  185. Prasad says

    Hi Dheeraj

    Kindly send me a detailed Ratios in a sheet

    Thanks for your contribution

    Keep the good work rocking

    Regards

    • Dheeraj Vaidya says

      Thanks Prasad. I have just sent you the sheet. Please check.

      • Mady says

        Hi Dheeraj

        Kindly send me a detailed Ratios in a sheet

        • Dheeraj Vaidya says

          Hi Mady, please check for the templates. Have sent an email.

  186. Vipul says

    Hello Dheeraj

    Seasons’ Greetings! Wish you are doing fine!

    Then i was trying to download the Colgate’s Ration Analysis excel template(both solved and unsolved excel templates) through the link provided on beginning of this page. However i haven’t received the same in my inbox in spite of providing multiple email id’s.

    Thus may i request you to forward me both of this templates to my below listed email id ASAP.

    Kindly do the needful at the earliest and oblige.

    Best/.
    Vipul

    • Dheeraj Vaidya says

      Hi Vipul, have sent the template to you.
      Thanks,
      Dheeraj

  187. Ololade says

    This is fantastic. well done. please can you mail the document to my email. could not download or copy properly. Thank you so much

  188. saurabh says

    Hi Dheeraj,

    I remember doing financial modeling module at corporate bridge with you guys. The training modules listed at Wallstreetmojo look interesting. Looking forward for learning some new modules.

  189. moruff says

    Very resourceful material…. Kindly send me the excel and PDF version. Thanks

    • Dheeraj Vaidya says

      Hi Moruff, have emailed you the templates. Please check.

      • stefan says

        Hi Vaidya,

        Kindly send me the excel and PDF version.
        Thanks

  190. hao says

    Hi, may I have a question, is that EBIT includes exceptional items or exclude exceptional items?

    • Dheeraj Vaidya says

      Hi Hao, EBIT may or maynot include exceptional items. You need to check the management discussion and analysis section for details of such exceptions items (if included).

  191. Talal says

    Hi Dheeraj,this is amazing work can you please send me the Ratio Analysis Solved and Unsolved Excel!

    Thank you

    • Dheeraj Vaidya says

      thanks Talal! have email you the ratio analysis templates.

  192. Piyush Akar says

    Hi Dheeraj your article was very useful to brush up basics of financial ratios and their applicability.
    Please do share Excel templates.

    Apart from above, Dheeraj i would like to know how can i connect to you for any other future references.

    Thanks!

    • Dheeraj Vaidya says

      Hi Piyush, thanks! have emailed you the templates. You will find my contact details in there.
      Cheers!

      • Kingsley Mwale says

        Hai! This kingsley from Zambia liked and enjoyed your article. Kindly send me if possible Ratio analysis solved and unsolved.
        Thanking you in advance

        • Dheeraj Vaidya says

          thanks Kingsley. Please check your email for the ratio analysis excel.

  193. Sean says

    Hi,

    Can you please send me the ratio analysis excel sheets?

    Thanks!

    • Dheeraj Vaidya says

      Hi Sean, please check your email for the templates.

      • stefan says

        Hi Vaidya,

        Can you send me the templete?
        Thank you

        • Dheeraj Vaidya says

          Done Stevan! Please check.

  194. David says

    Hello Dheeraj,

    It’s my first touch with WSMojo, and I feel really overwhelmed.

    How could I start at WSMojo? I mean, from 0 to get the necessary knowledge to break into IB.

    Greetings,

    David

    • Dheeraj Vaidya says

      Hi David, thanks! To break into IB, you need to master Excel, accounting, Financial modeling and valuations.

      If you are relatively new to accounting, a good place to start is this finance for non finance course. Thereafter, you can pick this Ratio analysis case study to understand the analysis part of accounting. For financial modeling, you can refer to this step by step guide to Financial modeling in excel. Try to practice this too.

      for valuations, you can refer to this link – Valuation

      Good luck,
      Dheeraj

        • Rajesh Dhanashire says

          Please check your email. I’ve just sent the model.

  195. Ibrar Ali says

    HidEAR Sir,
    I appreciate your efforts.I am ACCA Student.Could you plz send me these ratios in Excel formats.
    I will be very thankful.
    Regards,

    • Dheeraj Vaidya says

      Hi Ibrar, please check your mail. I have sent you the templates.

      Best,
      Dheeraj

  196. Ibraheem says

    Hi Deeraj

    This page has really been a blessing. You have done a marvellous job! Could you please send me all the excel as well. The email download buttons seems to have an issue.

    All the best,

    Thanks,

    Ibraheem

    • Dheeraj Vaidya says

      Hi Ibraheem, have sent the templates to your email id.

      Please check.

  197. Sharifah says

    Hi, useful article. Please send me the excel template at your convenience. Thanks and Best Regards,

    • Dheeraj Vaidya says

      Hi Sharifah, apologies for this extended delay. Have just sent you the template.

  198. Antonio says

    Hi Dheeraj,
    Very useful article.
    Could you please send to me the financial analysis templates?

    All the best

    Antonio

    • Dheeraj Vaidya says

      Thanks Antonio. Please check your email for the template.

  199. Jerome says

    Hi Dheeraj,

    Really amazing templates will be of great use and benefit to me. Please may you send all templates to me.

    • Dheeraj Vaidya says

      Hi Jerome! have sent the financial analysis templates to you.

      • sandeep misra says

        Amazing stuff. Kudos. Can you send me all updated templates along with the financial analysis temp.
        Thanks again.
        Sandeep

        • Dheeraj Vaidya says

          thanks Sandeep. Please check your email fo rthe templates.

  200. Ed says

    Hi can you please send me the ratio workbook. I learned a model complete from you and now I model on my own business.

    • Dheeraj Vaidya says

      Hi Ed, can you please check your email. Have just sent the ratio analysis workbook.

  201. Hafida says

    Hi Dheeraj, its very informative. Can you please send me the templates to my email?

  202. Peter says

    You are doing a great job for young Analyst

    Sir, can you please send me the Alibaba IPO Financial Model

    Thank you

  203. Peter says

    You are simply so Awesome! You are doing a great job for the investing community

    Sir, can you please send me the Ratio Analysis Solved and Unsolved Excel!

    Thank you

    • Dheeraj Vaidya says

      Hey Peter, many thanks :-) i have emailed you the ratio analysis excel sheets.

  204. Amine says

    Thank you that was really helpful. please i have one question.
    why for the sutainable growth rate you used return on owner’s equity and not return on total equity?

    best regards

  205. Abrar Tanoli says

    Excellent, really appreciate the efforts made by Dheeraj Vaidya…. how can i get these stuff in email.

    Regards
    Abrar Tanoli

    • Dheeraj Vaidya says

      Hi Abrar, emailed you excel ratio analysis templates.

  206. Vipul Shah says

    Hi Dheeraj

    could you please send me the Ratio Analysis Solved and Unsolved Excel! Somehow its not working through download mode.

    Best/.
    Vipul

  207. Ravindra says

    Hello Dheeraj
    Good analysis .. !!
    Request to share the financial analysis templates.

  208. Jennifer Lim says

    Hi Dheeraj, usefull article and excellent study. Please send me the excel template at your convenience. Thanks and Best Regards,

  209. JJ says

    Thank you for your comprehensive guide! Could you send me excel template through email? Thanks

    • Dheeraj Vaidya says

      Thanks JJ. Have sent the ratio analysis templates.

  210. Ganesh Pawar says

    Hi Dheeraj Great work.You making thing simpler to me.can I get ratio analysis excel sheet.

    • Dheeraj Vaidya says

      thanks Ganesh! Please check your inbox for the templates.

  211. Vinay says

    Very interesting and ratios and analysis presented in a very apt way. excellent

  212. Carla Wallis says

    Thank you for the article. It is very useful.

  213. Reza says

    This is a very comprehensive paper. Is this available in word or pdf? Also, can you please share the various excel files. Thanks.

    • Dheeraj Vaidya says

      Hi Reza, i don’t have a PDF. Have emailed you the ratio analysis templates. Please check.

  214. Dr. Mohammad Al-Afeef says

    Hi,
    Could you please send me the templates to my email, and all the ratios , and if can any information related to this subject, its great work
    thank you
    Dr. Mohammad Al-Afeef

    • Dheeraj Vaidya says

      Hello Dr. Mohammad Al-Afeef, please check your email. Have sent the financial analysis excel sheets.

  215. Jitendra Nailwal says

    Hi dheeraj,

    Great elborated sheet, can you please email to me?

    Thanks
    Jiten

    • Dheeraj Vaidya says

      thanks. Please check your inbox Jitendra for the templates.

  216. Clinton says

    This is great. I would love a copy. Thanks.

    • Dheeraj Vaidya says

      Please check your email Clinton. Hope you received it this time.

  217. ŞAHİN says

    Thank you for the great lesson.can you send me solved and unsolved templates.

    • Dheeraj Vaidya says

      Hi Sahin, thanks. Have sent you the excel templates on ratio analysis.

    • Rui Gomes says

      That tool is really wonderful. Would be possible to have a copy as well?

      Thank you

      • Dheeraj Vaidya says

        thanks Rui! Please check your inbox for the financial analysis template.

  218. Achintya Misra says

    Article is really interesting, Pls share the excel sheets.

  219. Jorge Lapa says

    Hi Dheeraj
    Your article is very useful to learn analyze company’s condition, could you send me the ratio analysis excel sheet?
    Thanks

    • Dheeraj Vaidya says

      Thanks Jorge! Please check your inbox for the financial analysis excel.

  220. Anges says

    Good work mister Dheeraj,please could you send me the template.Thank you in advance

    • Dheeraj Vaidya says

      thanks Anges. Please check your inbox for the templates.

  221. Phineas Magagula says

    Hi Dheeraj,
    This is a very useful article and comments. May you please send me the file as I am failing to download. Thanks a lot.

    • Dheeraj Vaidya says

      Thanks Phineas. Have resent the templates to you. Please check.

  222. razane khatib says

    Amazing explanation Dheeraj. Thank you alot. May i have a copy of the templates plz as well. thank you so much

    • Dheeraj Vaidya says

      thanks Razane! Please check your inbox for the details.

  223. Apoorv Tiwari says

    hey dheeraj i am one for your followers i just want to thank you for this content you have put here…….this is amazing putting all this knowledge in a structured form requires huge amount of efforts all your post are very detailed thank you sir once again….you are doing great and wish you all the success in life and in general.

    I would request you to please send me the template of Ratio Analysis.

    • Dheeraj Vaidya says

      Many thanks for the wishes Apoorv. Please check your inbox for the templates.
      Best,
      Dheeraj

  224. Nada El Shakankiry says

    Hi Dheeraj,

    Would you please send me the Ratio Analysis Solved and Unsolved Excel?

    • Dheeraj Vaidya says

      Hi Nada, please check your inbox for the ratio analysis excel.

      • Nada El Shakankiry says

        Thank you..

  225. julita says

    Hello.
    Your article is very useful to learn analyze company’s condition, could you send me the ratio analysis excel sheet?
    Thanks

    • Dheeraj Vaidya says

      thanks Julita. Please check your inbox for the excel sheet.

  226. Shoaib Ibrahim says

    Hello Dagestan,
    Really insightful work. Please share both templates and guide. Would appreciate such an amazing work on cash flow statement.

    Regards,

    Shoaib

    • Dheeraj Vaidya says

      thanks Shoaib. Will try and make one on the Cash Flow statements too. I have sent the templates to your id.

  227. Mohammed Abdelsalam says

    Very nice work.

    but why some definitions is not appearing.

    and please i need the template.

    • Dheeraj Vaidya says

      Thanks Mohammed. Can you please let me know which sections don’t appear. I have sent the ratio analysis templates to you.

  228. Ali says

    Thank you for this effort.

    • Dheeraj Vaidya says

      Hi Ali, please check your mail for the ratio analysis spreadsheet.

  229. Hamilton Cleto says

    Hi Dheeraj plse can you send me the templates please.

    Much appreciated

    Hamilton

    • Dheeraj Vaidya says

      Hi Hamilton, please check your inbox for the templates.

  230. Mohammad Eftekhari says

    It is astonishing , keep up the good work
    I would be pleased if you could send me a copy

    • Dheeraj Vaidya says

      Thanks Mohammad. Please check your email for the ratio analysis spreadsheet.

  231. Fedwa Agnaou says

    Hi Dheeraj,

    thanks a lot I’ve received them
    you’ve made a great work thanks for all

  232. Parkar Vaseem says

    Can you please forward me the same :)

    • Dheeraj Vaidya says

      Hi Parkar, i have just resent you the templates. Please check.

    • Nazariy says

      hi Dheeraj,

      Could you please share with your ratio template? it looks great and full I would like to understand if it is simple in use.
      Thank you in advance.

      • Dheeraj Vaidya says

        thanks Nazariy! I have sent the templates to your id.

  233. Deepika says

    Hi Dheeraj, your posts are too good for a beginner to understand. I would like to have the excel template to have more meaningful insight. Your posts helps me alot and keep up your good work.. keep writing. Good Day

    • Dheeraj Vaidya says

      thanks Deepika for the encouraging works. Please check your inbox for the ratio analysis sheet.

  234. Naseer Ahmed says

    Hi Dheeraj, you are really helping the financial aspirants. Can you please send me the file Solved and Unsolved excel?

    • Dheeraj Vaidya says

      Thanks Naseer. Please check your mail for the ratio analysis sheets.

  235. Deepika says

    Hi Dheeraj, Your post is awesome with very strong explanation. You are doing a great work.
    can you please send me the excel template to have more meaningful insight from the article.

  236. Esmie Ngagwe says

    Hey Dheeraj,
    This is very useful indeed. I work as an auditor and my work requires a great deal of analytical skill…I am even considering Financial analysis courses…

    Great job

  237. Stuart Heeks says

    Hi Dheeraj, This is a very good spreadsheet and will prove very useful for our trainees. Please could you email me the spreadsheet?

    • Dheeraj Vaidya says

      Hi Stuart, please check your inbox for the ratio analysis excel sheet. Have just emailed you the same.
      Best,
      Dheeraj

  238. Ahmed says

    Hi Dheeraj; could you send me a copy please

  239. May Poon says

    Hello Dheeraj,

    Great work and in-depth analysis. Is it possible to send me the templates? Much appreciated.

  240. Eswar Penugonda says

    the work is really amazing sir. it would be useful to me Please kindly send me the excel sheet. Thanks

    • Dheeraj Vaidya says

      Thanks Eswar. Have sent the financial analysis templates to you.

  241. Renee Gosselin says

    Dheeraj,
    Wow! Congratulations for your great work!

    Can you please send me the Ratio Analysis Solved and Unsolved Excel files?

    Thank you

    • Dheeraj Vaidya says

      thanks Renee! have just sent the templates. Please check.

  242. hitarth says

    Hi Dheeraj, quite useful article, can you please sned me the file? Thank you.

  243. Durga Prasad says

    Hi Dheeraj,great job and I hope to get these kind of articles going forward as well. Can you please send the file to my mail.

    • Dheeraj Vaidya says

      thanks Durga :-). I have sent across the ratio analysis sheets to you.

  244. David Brito says

    Hi Dheeraj,

    Excellent job
    Could you please send me the template on my email
    Thanks a lot,

    • Dheeraj Vaidya says

      many thanks David :-).

      Please check your inbox for the templates.

  245. srikanth thogarchedu says

    excellent work, appreciated.
    can you please share the excel template for my reference and practice?

    thank you

    • Dheeraj Vaidya says

      thanks Srikanth. Have sent the ratio analysis excel for your reference.

  246. RAHUL PADHIAR says

    Hi Dheeraj,
    Love your work keep it up man, please send me the templates

    Thanks!

  247. Rajiv Mehra says

    Hi Dheeraj. Can you please mail me the colgate template.

    Thanks Appreciate it.

    • Dheeraj Vaidya says

      thanks Rajiv. I have sent the financial analysis excel.

  248. Umang parekh says

    Hello,
    Could you please send me a mail of this solved template ?

    • Dheeraj Vaidya says

      Hi Umang, can you please check your mail. thanks.

  249. Muhammad Aimash says

    Great Work. Thanks for this. I can totally see the number of hours you must have spent to get this done. Can I also get a copy of the excel template.

    Kind Regards,
    Muhammad Aimash

    • Dheeraj Vaidya says

      thanks Muhammad for your kind words. i have just sent the ratio analysis excel sheets for your perusal.

  250. Tony says

    Dheeraj, this is a great work. Can you please send me the templates? Thanks

  251. Leonardo Cuzul says

    This is certainly an outstanding work. Thank you for sharing it. Would you mind sending me the template?

    • Dheeraj Vaidya says

      Hi Leonardo, thanks for the encouragement. Have just send the ratio analysis files at your inbox.

  252. I Naumov says

    Sir, can you please send me the Ratio Analysis Solved and Unsolved Excel!

    Thank you

    • Dheeraj Vaidya says

      Please check your inbox for the ratio analysis files.

  253. Simon says

    Dear Dheeraj,
    Good job, deep explanation!
    Could you pls send me the templates (solved & unsolved) and PDF of this article?
    Many thanks!
    Simon

    • Dheeraj Vaidya says

      thanks Simon. I have happy to see that this ratio analysis guide was useful. Have sent the excel files at your email.

  254. Mamoudou says

    Clear, concise what a great article, Very helpful. Can you please sent me the file

    • Dheeraj Vaidya says

      thanks Mamoudou! please check your inbox for the files.

  255. Moses says

    That’s amazing for the financial better skills development.

  256. Cem Durdubasoglu says

    Could you please send me the template on my email thanks a lots

    • Dheeraj Vaidya says

      Hello Cem, please check your mail for the templates!

      • Malesela says

        Hi Dheeraj, could you please email me your template. Thanks this is great.

      • Rafagag says

        Hi;

        Congratulations for your job!, Please send me the templates on my email.

        It would be helpful.

        • Dheeraj Vaidya says

          thanks Rafagag. Please check your mail for the ratio analysis excel sheets.

  257. ADL says

    Thanks so much for this. Please send the templates if you don’t mind sending another set.

    Terrific work.

    Best,
    Andrea

  258. Sony Ha says

    Hi Dheeraj,

    Thank you for your clear explanation, can you please send me the templates? It would be helpful.

    • Dheeraj Vaidya says

      Thanks Sony for the appreciation. Please check your mail for the ratio analysis template.

  259. Bourdrel Edouard says

    Hi Dheerja,
    really nice job ! Could you send me the templates ? Thank you in advance !
    ED

  260. Prakash Deo says

    This was a wonderful article and became easy learning for me. Could you please share those templates with me so that i could benefit form it even more. Thank you in advance.

    • Dheeraj Vaidya says

      Thanks Prakash! Please check your inbox for the ratio templates.

  261. Dsd says

    Great job Deheeraj!

    Could you please send me the templates?

    Thanks!

    • Dheeraj Vaidya says

      Thanks Dsd, please check your inbox for the ratio templates

  262. Mujahid Rasul says

    Really a Great stuff and thank you for your patience for very clearly explaining FS analysis in great detail.

    Can you please email me the excel templates? Both solved and unsolved.

    Regards

    Mujahid

    • Dheeraj Vaidya says

      thanks Mujahid for the appreciation! I have emailed you the financial statement analysis excel sheets.

  263. SNIGDHENDU MUKHOPADHYAY says

    Sir, would you please send me the templates as i am A CFA L-I candidate.
    with regards.
    Snigdhendu

  264. Danish Cooper says

    Cash and Cash equivalents has increased from 4.2% in 2007 and is currently standing at 8.1% of the total assets. Why a built-up of cash?
    This above is one of the many questions one must ask while doing vertical analysis. Could you guide me on how to answer this and other such questions?
    Thank you.

    • Dheeraj Vaidya says

      Hi Danish,

      Good question :-)
      The vertical and horizontal anlaysis provides us with the questions and not the answers. We need to go deep into the annual report to find out the reason for the same. Best place to start with is the Management Discussion and Analysis section. In this they do discuss the variations, growth figures etc.

      Best,
      Dheeraj

  265. syafrien anwar says

    Hi Deeraj

    It’s an excellent job you’ve done.Could you please send me the excell as well.Thanks

    • Dheeraj Vaidya says

      thanks Syafrien! please check your inbox for the excel sheets.

  266. Justine says

    This is awesome. Very helpful!

    Can you send me the excel both Solved and Unsolved?
    Thanks!

  267. Ruth says

    Hi Dheeraj, thanks for this excellent study. Helped me learn some new approaches. Wold you be able to email me the template? Hope to see more from you :)

    • Dheeraj Vaidya says

      Hi Ruth, glad that you liked the material and found this useful. Please check your inbox for the details.

  268. Jorge says

    Hi Dheeraj,

    Would you be son kind to send me the template?

    regards,

    JB

  269. Hugo Catacora says

    Hi Dheeraj
    Excellent work, Could you please send me the template (both solved and unsolved) and PDF for this lesson on my email ?
    Thanks in advance.
    Hugo