Making Sense of Financial Ratios
Financial ratios can look intimidating at first. All those numbers and formulas. But here's the thing – once you get the hang of what each one actually tells you about a business, they become pretty useful tools.
We've spent years working with Australian businesses, and we've noticed something. The ones who really understand their ratios tend to make better decisions. Not because they're number geniuses, but because they know what to look for.
Breaking Down the Main Categories
Liquidity Ratios
Can you pay your bills next month? That's what liquidity ratios tell you. Current ratio and quick ratio are the big ones here.
A café owner we worked with in Albury discovered they had plenty of assets but not enough cash on hand. This ratio caught it early.
Profitability Ratios
You're making revenue, sure. But are you actually keeping any of it? Gross margin and net profit margin show where your money really goes.
Sometimes a business looks busy but the margins tell a different story. These ratios don't lie about profitability.
Efficiency Ratios
How well are you using what you've got? Inventory turnover and receivables days show if you're letting money sit idle.
One client found out they were holding stock for 90 days when their competitors averaged 45. That's cash stuck on shelves.
Leverage Ratios
Debt isn't automatically bad. But you need to know how much weight you're carrying. Debt-to-equity ratio is your friend here.
Banks look at this when you want to expand. Better to know your number before they ask.
Our Approach to Teaching Ratios
We don't just throw formulas at you and call it education. Our program walks through real scenarios from Australian businesses, showing you what these numbers mean in practice.
Context First
Every ratio means something different depending on your industry. Retail works differently than consulting. We start by showing you what normal looks like in your field.
Real Numbers
You'll work with actual financial statements from businesses similar to yours. Not textbook examples – real data with all its messiness and complications.
Pattern Recognition
After calculating enough ratios, you start seeing patterns. What looks healthy versus what needs attention. This is where it clicks for most people.
Decision Making
The whole point is better decisions. Should you extend credit to that new customer? Is now the time to expand? Ratios help you answer these with confidence.
Who's Teaching This
Our instructors have worked with hundreds of Australian businesses over the years. They've seen what works and what doesn't when it comes to financial analysis.
Darren McLeod
Spent 15 years analyzing businesses for acquisition. Now teaches others how to spot what the numbers are really saying. Knows his way around a balance sheet.
Petra Kowalski
Worked with over 200 Australian SMEs on their financial systems. Has a knack for explaining complex concepts in ways that actually make sense to business owners.
Siobhan Reeves
Maintains our database of industry standards across different sectors. If you want to know how your ratios compare to similar businesses, she's your person.
Ready to Understand Your Numbers?
Our comprehensive program on financial ratios starts in October 2025. You'll learn to read, calculate, and actually use these tools in your business decision-making.
Get Program Details