Applied analysis
Case: a full company analysis
Pull every lens together on three years of Rawdah's statements, build the dashboard, find the root cause and write the conclusion.
Learning objectives
- Build a complete ratio set across growth, profitability, efficiency, liquidity, leverage and cash flow
- Summarise the trend in each lens with a direction-aware verdict
- Trace the deterioration to its root cause and quantify it
- Choose and defend a written conclusion that weighs level against trend
Every lesson so far has looked at Rawdah Home Retail Co. (fictional) through one lens. Real analysis — a credit memo, an equity initiation, an acquisition screen — needs all of them at once, organised so a reader can follow the argument. This case is that exercise: three years of statements, one model, one conclusion.
Work in the order a professional would:
- Lay out the data and check it (the statements balance and reconcile).
- Compute the ratios lens by lens, on stated definitions.
- Summarise each lens in one key metric, earliest year against latest, with a direction-aware verdict.
- Find the root cause: which movement explains the others?
- Write the conclusion: verdict, evidence, cause, what to watch.
ROE = NI ÷ avg Equity ROIC = EBIT × (1 − tax ÷ PBT) ÷ avg (Debt + Equity − Cash) DSO, DIO, DPO on average balances Net debt = Debt − Cash FCF = CFO − Capex
- avg
- (opening + closing) ÷ 2; FY2022 balances are the opening for FY2023
- Current liabilities
- Rawdah's are trade payables only (its debt is long-term)
- Verdict
- Better if (change × direction) > 0, otherwise Worse; direction is 1 when higher is better, −1 when lower is better
Included with a Formula Quest membership
The rest of this lesson is for members. Members get the full lesson, including its 3 graded exercises, and every other Finance Quest lesson.
That's the last lesson in Financial Statement Analysis
Prove what you've learned with this track's assessed work — it counts towards your certificate.