Business Basics: Understanding Financial Ratios

For anyone interested in running a business, mastering some basic accounting principles is a must, and chemical engineers are no exception. We will be taking a look at a few of these concepts in a short series of videos on financial statements to give you a brief introduction.

Understanding the financial health of a business depends on a set of key ratios that are used to asses profitability, liquidity, and efficiency. The video above looks at how ratios calculated from information found on a company’s financial statements allow that company’s financial performance to be assessed over time, or against other companies or industry segments.

If you’d like to know more about tracking and assessing a company’s financial health, you may also want to check out the AIChE Academy course Cash Flow Principles for Chemical Engineers.