Understanding profits and investor ratios (ICAS)


The course goes back to the fundamentals of what profit is and introduces some other measures including EBITDA (Earnings before interest, tax, depreciation and amortisation). It goes through a practical application of ratio analysis using real life examples to interpret the financial position and performance of a company. Ratios used include profit margins, dividend yield, dividend cover, earnings per share. The module ends with an acknowledgement of some of the limitations of ratio analysis such as sector dynamics, size of entity and different accounting polices.

Learning Outcomes

By completing this course you will be able to: 

  • Calculate ratios including Gross Profit and Operating Profit
  • Understand the needs of investors and interpret Gearing, Earnings per Share and the P/E Ratio
  • Interpret the results of ratio calculations and understand how to use the results to make business decisions
  • Explain the limitations of ratio analysis

Authored by: Gemma Rudrum

Gemma Rudrum qualified as a chartered accountant with Ernst & Young in 2004, working in their Assurance and Advisory team. She joined BPP in 2007 as a tutor teaching financial reporting and auditing subjects. She has also worked in our Learning Media team designing and developing content and is now our Head of Work Based Learning and runs our PGCert programme.

CPD Points: 1

CPD Duration (hours): 1

Access: 12 months from purchase date

Price: £35.00 (excludes VAT)