[Verse 1]
When balance sheets and income statements land upon your desk
You need to dig much deeper than the numbers might suggest
Current ratio tells you if they'll pay their bills today
Quick ratio strips inventory to see the liquid way
[Chorus]
Analyze, analyze, let the ratios be your guide
Liquidity, solvency, profitability inside
Margin times the turnover times leverage equals ROE
DuPont breaks it down to show you where the profits flow
Financial statements tell their story if you know the code
Ratios reveal the path along the corporate road
[Verse 2]
Debt-to-equity shows leverage, how much borrowed cash they hold
Interest coverage ratio tells if payments leave them cold
Gross margin shows the markup, net margin shows the end
Asset turnover efficiency, how well resources blend
[Chorus]
Analyze, analyze, let the ratios be your guide
Liquidity, solvency, profitability inside
Margin times the turnover times leverage equals ROE
DuPont breaks it down to show you where the profits flow
Financial statements tell their story if you know the code
Ratios reveal the path along the corporate road
[Verse 3]
Receivables turnover shows collection velocity
Inventory turnover measures stock efficiency
ROA reveals how assets generate the company's gain
ROE shows equity returns through sunshine and through rain
[Bridge]
Common-size percentages make comparisons so clear
Trend analysis shows the patterns year to year
Cash flow from operations, investing, financing too
Free cash flow calculation shows what's really coming through
[Verse 4]
Quality of earnings asks if profits are for real
Accruals and deferrals might obscure the true deal
Working capital changes, capital expenditure costs
Without free cash flow positive, the battle might be lost
[Outro]
Every line item tells a story of the company's health
Ratios are the language that reveals the hidden wealth
From current to quick ratios, from margins to returns
Financial statement analysis is how an analyst learns