### Learning Objectives

By the end of this section, you will be able to:

- Analyze financial statements and determine solvency and profitability.
- Analyze comparative financial statements.
- Calculate trend percentages.
- Prepare common-size financial statements.
- Calculate ratios that analyze a company’s earnings performance:
- Rate of return on total assets
- Rate of return on common stockholders’ equity 3. Earnings per share
- Price-earnings ratio
- Dividend yield rate

- Calculate ratios that analyze a company’s long-term debt-paying ability:
- Times interest earned
- Debt to total assets ratio
- Stockholders’ equity to total assets ratio

- Calculate ratios that analyze a company’s short-term debt-paying ability:
- Working capital
- Current ratio
- Quick ratio
- Inventory turnover
- Accounts receivable turnover