A Sorry State of Affairs: The Problems with Financial Ratio Education

Mankin, J.A. & Jewell, J.J. (2014). A Sorry State of Affairs: The Problems with Financial Ratio Education. Academy of Educational Leadership Journal, 18(4), 195-219.

25 Pages Posted: 3 Oct 2012 Last revised: 20 Jul 2018

See all articles by Jeffrey A. Mankin

Jeffrey A. Mankin

Lipscomb University - Department of Accounting, Finance & Economics

Jeffrey Jay Jewell

Lipscomb University - Department of Accounting, Finance & Economics

Date Written: 2014

Abstract

This paper examines a large sample of accounting, finance, management, marketing, and financial statement analysis texts. The  “top  20”  ratios  in  business textbooks are identified and discussed. The paper finds two major problems with ratio presentation in business textbooks: formula confusion and naming confusion. Many ratios bearing the same name are presented with different mathematical formulas. Only four of the top 20 ratios have 100% consensus on the formula. Many  ratios  also  have  several  commonly  used  “aliases”  or  alternate names. These two issues may cause considerable difficulty for both students and practitioners.

Keywords: financial ratios, financial analysis, business textbooks, financial ratio formulas

JEL Classification: M41, G12, G32

Suggested Citation

Mankin, Jeffrey A. and Jewell, Jeffrey Jay, A Sorry State of Affairs: The Problems with Financial Ratio Education (2014). Mankin, J.A. & Jewell, J.J. (2014). A Sorry State of Affairs: The Problems with Financial Ratio Education. Academy of Educational Leadership Journal, 18(4), 195-219.. Available at SSRN: https://ssrn.com/abstract=2156558

Jeffrey A. Mankin (Contact Author)

Lipscomb University - Department of Accounting, Finance & Economics ( email )

One University Park Drive
Nashville, TN 37204-3951
United States

HOME PAGE: http://www.lipscomb.edu

Jeffrey Jay Jewell

Lipscomb University - Department of Accounting, Finance & Economics ( email )

One University Park Drive
Nashville, TN 37204-3951
United States
6159665769 (Phone)

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