Learning Objectives
By the end of this module, you will be able to:
Understand the Purpose of Financial Ratios
Learn how ratios help evaluate profitability, liquidity, leverage, efficiency, and debt servicing capacity.
Understand how ratios support credit risk assessment, covenant setting and loan structuring.
Accurately Calculate Key Ratios
Apply standardised formulas to calculate key financial ratios from financial statements.
Evaluate a client’s operating performance, financial risk, and borrowing capacity through hands-on calculations.
Interpret and Compare Ratio Results
Analyse year-on-year trends to identify performance improvements or deterioration.
Benchmark ratios against industry standards to highlight strengths, weaknesses, and potential risks.
Apply Ratio Analysis to Credit Decisions
Use ratio insights to support credit recommendations, loan structuring, and financial covenant setting.
Present ratio analysis clearly and persuasively in credit papers.
Recognise the Limits of Ratio Analysis
Understand that ratios are indicators, not absolute conclusions.
Combine ratio findings with qualitative insights, industry context, and the client’s business model for a complete credit assessment.
