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Dr. Ray Rodriguez

Ratio Analysis

Publicly traded companies are required to provide annual financial statements to update their stakeholders on the health of the company. Statements can be twisted to paint a prettier financial picture than what the company is actually experiencing, and so financial analysts use a variety of ratios to help determine the actual financial health of the company. In this exercise, students learn some basics about financial statements and financial ratio analysis. Next, students form groups and pick six public companies and find their most recent annual statements (which can be done from any webconnected device). Students perform a quick and simple ratio analysis on their companies and make some notes on their discoveries. We end by having each group briefly discuss their findings.