Financial Statement and Ratio Analysis Tools


Financial statement and ratio analysis training begins now. The journey into the world of small business finance can be very exciting and empowering if you have the right knowledge and training.

"The will to win is worthless if you do not have the will to prepare."

Understanding a financial statement and ratio analysis is very important to you and to your business. The financial analysis skills needed are not difficult to obtain with a little bit of time and motivation.

If you monitor your business financials on a regular basis and compare your business results to industry financial ratios, you'll gain powerful insight into how effectively you are managing your business.

"Running a business without being able to read financial statements properly amounts to financial malpractice."

New and existing lenders will want to evaluate your financial statements to assess potential risk based on several sets of business ratios.

Keep in mind that every financial ratio is simply an indicator - at a point in time. Only you know the entire story behind the number relative to your business.

When your lender looks at a particular ratio and perceives a potential problem - or asks for a clarification, she will look to you for the answer to her questions. There may be a perfectly legitimate and proper reason for any one ratio to appear “off” compared to industry financial ratios.

Only by you fully understanding your business and being able to speak the financial language to a creditor, will you be able to respond with authority on the subject. And we are about to help you with that.

We have discovered a wonderful (and FREE) tool to help you begin to better understand your business financial statments.

The Small Business Administration (SBA) provides a wealth of knowledge and insight for its readers. The problem is, there is so much information, it can be difficult to wade through. So stick with us and we'll lead you to what you need to read and understand a financial statement and ratio analysis.

”To be conscious that you are ignorant of the facts
is a great step to knowledge.”

- Benjamin Disraeli

Let’s take a short self-assessment to see what you know, or don’t know, about reading . Don’t worry, it is very short. Just be honest and answer the questions on a piece of paper as you review each section of the list.

Please don’t leave any questions blank, take your time to really think through your responses.

Click to see Is Entrepreneurship For You?

The above self-assessment is just for your information. Now you have a better idea of where you are and how much you need to learn to become more proficient at reading a financial statement and ratio analysis, among other things.

"With financial ratio know-how, your chances of financial success increase exponentially."

Next, take some time to take a Free Online Entrepreneurship Course, again offered by the SBA.

The SBA also has a free course called Introduction to Accounting that will guide you through the key areas of your financial statements. As we said earlier, learning key financial information is fairly straightforward – not rocket science. We know you can learn these important business leadership skills.

Free Financial Tools & Templates

The following links go directly to the relative tutorial page on the SBA web site. Once you have completed a review of each page, you will have a much better understanding of how to effectively utilize a financial statement and ratio analysis tools and templates.

Review the following to resource pages and free template tools:

Financials – Part 1 - Balance Sheet Explained    |    Free Excel Template

Financials – Part 2 – Income Statement Explained    |    Free Excel Template

Financials – Part 3 – Cash Flow Statement Explained    |    Free Excel Template

Financial statement and ratio analysis resource guides are available, so do spend some time on this, it really is THAT important! Here's another great resource on financial analysis: Financial Statement and Ratio Analysis

NOTE: Additional business finance modules are in development at the SBA. When new courses are available, we will provide links here for your convenience.

Financial statement and ratio analysis skills are invaluable for every small business owner or business executive. Utilize this knowledge to make better decisions, which will minimize your risk and maximize the profitability of your business.

As we conclude our discussion on the importance of reading financial statements, you now have several new financial tools and resources to help you work on becoming the true expert of your business.

"The safe way to double your money is to fold it over once and put it in your pocket."

- Frank Hubbard

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