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Using financial ratios in Excel

Using financial ratios in Excel - Microsoft Excel Tutorial

From the course: Excel for Accountants

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Using financial ratios in Excel

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- [Instructor] Financial ratios are an important tool in accounting, and we can use Excel not only to easily calculate those financial ratios, but also help us to avoid errors and issues in the calculations. I'm in the 05_03_Begin Excel file. Now, what we have here is a simplified set of financial statements, our statement of cash flows, balance sheet, and income statement for our hypothetical firm. And we've done this for the last five years, and we've got projections for the coming five years. Now, what we might want to do is go through and calculate certain ratios, and we've done that in various places throughout the sheet. But I've included a few salient ones at the bottom here. We've got, for example, our debt to asset ratio, the current ratio, debt to EBITDA, return on assets, and we could add dozens more here, of course. But Excel makes it really easy to go through and calculate these ratios in a dynamic fashion. For example, if my return on assets changes, let's say…

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