What are the balance sheet key ratios?

In the continuity of the of the latest tutorials dedicated to financial analysis, including analyzes of the income statement and balance sheet, it is interesting to go further further in order to further exploit the information present in a balance sheet and to understand what is the solvency and solidity of a company.

Indeed, the balance sheet informs us beyond that numbers. It teaches us a story, that of a company, its founders, its conception and its evolution. How does it deliver the services and products ordered by customers? How does it finance its operating cycle. Does it resort to number of lenders and partners or does it manage its financial needs itself?

And these financial resources, internal and external, that it has, how does it use them? Is their job fair and healthy? Or does it demonstrate poor quality management, or even a disguise of reality? ? It allows you to enter into the intimacy of the company and evaluate its solvency, its strengths and its weaknesses. Of course, it's not all. Other elements are to be taken into account in the credit analysis of a company: the income statement, the commercial positioning, the sector of activity, the economic context, the quality of services and products offered, etc. However, the balance sheet is the central accounting element to use. The income statement is ultimately only the detail of an item on the liability side of the balance sheet: the Profit for the financial year.

Read the tutorial on key balance sheet ratios, without forgetting of course to start with Understanding and analyzing the balance sheet.