Intermediate level · Module 6: Financial Analysis and Capstone · Lesson 2 of 3
Interpreting Financial Health
Turn ratios into a clear judgement and advice.
In this lesson you will
- Interpret ratio trends
- Write financial advice for non-specialists
Key concepts
trendsbenchmarkswarning signsadvice
The lesson
Ratios mean little alone: compare with last year, the budget and similar organisations.
Warning signs include falling liquidity, rising debtor or stock days and shrinking margins — together they often signal a cash squeeze ahead.
Write advice in plain language: what is happening, why it matters and what to do, with figures to support each point.
Step by step
- Compare ratios across years.
- Identify warning signs.
- Link them to causes.
- Write advice.
Practice activity
Write a one-page financial health assessment.
Expected result: A clear assessment with supported advice.
Check your understanding
-
Why compare ratios over time?
Show answer
Trends show whether health is improving or worsening.
-
What do rising debtor days suggest?
Show answer
Customers are paying more slowly, tying up cash.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.