Welcome to Financial Ratios
In this module, you will learn how to calculate, interpret, and apply Key Financial Ratios commonly used in commercial lending. These ratios are essential for analysing a client’s profitability, liquidity, capital structure, efficiency, and debt servicing capacity.
As a credit analyst, your role is to assess whether a client can meet their financial commitments, including interest, fees, and loan principal repayments, on time and in full.
Financial ratios simply complex financial statements into clear, measurable indicators of performance, risk, and repayment strength.
What to expect in this module
You will work through real-world commercial lending scenarios that build your capability as a credit analyst to calculate, interpret, and apply Financial Ratios in assessing a client’s financial position and creditworthiness.
Through practical examples, hands-on exercises, and credit focused case studies, you will learn to:
- Calculate key financial ratios directly from client financial statements
- Analyse ratio trends over time and benchmark them against industry standards
- Interpret what ratios reveal about a client’s financial health and repayment capacity
- Apply ratio insights to support financial analysis, covenant setting, and commercial loan structuring
How will you learn
At the end of this module, you will complete a set of final questions and and exercise that will test your ability to:
- Accurately calculate and clearly explain key ratios used in credit analysis.
- Identify early warning signals, emerging risk, and red flags in ratio trends.
- Use ratio insights to make and justify sound credit recommendations.
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Module Content
- Mentor feedback is provided only after all Review Questions for the entire module have been completed, not after individual topics. Feedback will be delivered through the Review Questions Summary.
- You may update your Review Question responses at any time. If you choose to reattempt the Review Questions for a specific topic, your previous responses will not be visible and you will be required to answer all questions for that topic again.
- If you prefer not to reattempt individual topics, you can instead update your responses via the Review Questions Summary.
- From there, you can download all of your responses, review and edit them as needed, and re upload the document for mentor review.
- Once the mentors are satisfied with your responses across all Review Questions in the module, you will be progressed and granted access to the Final Questions and Exercise(s).
Need technical support?
If you run into any issues on the website, get in touch with our technical team at @creditanalystacademy.com
- Mentor feedback is provided only after all Review Questions for the entire module have been completed, not after individual topics. Feedback will be delivered through the Review Questions Summary.
- You may update your Review Question responses at any time. If you choose to reattempt the Review Questions for a specific topic, your previous responses will not be visible and you will be required to answer all questions for that topic again.
- If you prefer not to reattempt individual topics, you can instead update your responses via the Review Questions Summary.
- From there, you can download all of your responses, review and edit them as needed, and re upload the document for mentor review.
- Once the mentors are satisfied with your responses across all Review Questions in the module, you will be progressed and granted access to the Final Questions and Exercise(s).
Need technical support?
If you run into any issues on the website, get in touch with our technical team at @creditanalystacademy.com
- Mentor feedback is provided only after all Review Questions for the entire module have been completed, not after individual topics. Feedback will be delivered through the Review Questions Summary.
- You may update your Review Question responses at any time. If you choose to reattempt the Review Questions for a specific topic, your previous responses will not be visible and you will be required to answer all questions for that topic again.
- If you prefer not to reattempt individual topics, you can instead update your responses via the Review Questions Summary.
- From there, you can download all of your responses, review and edit them as needed, and re upload the document for mentor review.
- Once the mentors are satisfied with your responses across all Review Questions in the module, you will be progressed and granted access to the Final Questions and Exercise(s).
Need technical support?
If you run into any issues on the website, get in touch with our technical team at @creditanalystacademy.com
- Mentor feedback is provided only after all Review Questions for the entire module have been completed, not after individual topics. Feedback will be delivered through the Review Questions Summary.
- You may update your Review Question responses at any time. If you choose to reattempt the Review Questions for a specific topic, your previous responses will not be visible and you will be required to answer all questions for that topic again.
- If you prefer not to reattempt individual topics, you can instead update your responses via the Review Questions Summary.
- From there, you can download all of your responses, review and edit them as needed, and re upload the document for mentor review.
- Once the mentors are satisfied with your responses across all Review Questions in the module, you will be progressed and granted access to the Final Questions and Exercise(s).
Need technical support?
If you run into any issues on the website, get in touch with our technical team at @creditanalystacademy.com
- Mentor feedback is provided only after all Review Questions for the entire module have been completed, not after individual topics. Feedback will be delivered through the Review Questions Summary.
- You may update your Review Question responses at any time. If you choose to reattempt the Review Questions for a specific topic, your previous responses will not be visible and you will be required to answer all questions for that topic again.
- If you prefer not to reattempt individual topics, you can instead update your responses via the Review Questions Summary.
- From there, you can download all of your responses, review and edit them as needed, and re upload the document for mentor review.
- Once the mentors are satisfied with your responses across all Review Questions in the module, you will be progressed and granted access to the Final Questions and Exercise(s).
Need technical support?
If you run into any issues on the website, get in touch with our technical team at @creditanalystacademy.com
- Mentor feedback is provided only after all Review Questions for the entire module have been completed, not after individual topics. Feedback will be delivered through the Review Questions Summary.
- You may update your Review Question responses at any time. If you choose to reattempt the Review Questions for a specific topic, your previous responses will not be visible and you will be required to answer all questions for that topic again.
- If you prefer not to reattempt individual topics, you can instead update your responses via the Review Questions Summary.
- From there, you can download all of your responses, review and edit them as needed, and re upload the document for mentor review.
- Once the mentors are satisfied with your responses across all Review Questions in the module, you will be progressed and granted access to the Final Questions and Exercise(s).
Need technical support?
If you run into any issues on the website, get in touch with our technical team at @creditanalystacademy.com
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.
