Investment Banking For Dummies

Chapter 8

Perfecting the Financial Ratios for Investment Banking

In This Chapter

Finding out how investment bankers use ratios to glean insights from financial statements

Uncovering how much companies are worth using valuation ratios

Seeing how financially well positioned a company is with liquidity ratios

Stacking up companies against each other using profitability ratios

Detecting how well management uses shareholder money with efficiency ratios

Tracking how quickly a company drives its bottom line with growth-rate analysis

If you're like most people, many ratios in your life provide insights about your daily routine. Your car's miles-per-gallon is a ratio that tells you how efficient your car uses energy. And your effective tax rate indicates how much of your paycheck winds up in Uncle Sam's hands.

Investment bankers, too, make extensive use of ratios to glean insights about companies ...