April 2 to 7 – Of Financial Ratio Analysis and Linear Programming 

I struggled to create time for this diary entry. A group of my faith-based associates had a long road travel to town for a conference and their car developed a battery-charging fault. I had just picked up my device to start writing my entry when Mlaku’s call came in. “Mr _’s car just broke down near your junction”, he said to me quickly.  After multiple calls, it became apparent that I had to go meet them at the junction. Perhaps, my car’s battery could be used to get them going again. In the end, my laptop lay waiting for me on the chair’s armrest till 2:00 am. We had spent some hours trying to get the car to keep battery power, but it could not; then we had to tow it to my house. Afterward, I had to drive 58 kilometers to and from the venue of the conference to drop off the now-stranded members of the team. When I came home, it was a few minutes before 2:00 am.

So, I lost my first opportunity to write this piece. Today, it is some minutes past 9 pm when I begin writing this. I look at my course calendar and class notes to recall what happened during the week. I realize I had not downloaded the PowerPoint presentation e-mailed by the faculty. I quickly do so, skim through them, and get a fuller remembrance of the week’s engagement. We had two classes on Corporate Financial Analysis and a single class on Data Analytics.

Prof. Owolabi ran through the methods of analyzing a company’s financial reports. We talked about ratios, horizontal & vertical analyses, Common-size statements, and trend percentages. He explains that ratios indicate proportions and are useful for evaluating performance. The categories of financial ratios considered include:

• Activity ratios: these measure how much assets are being utilized.
• Liquidity ratios: these indicate how the company is able to handle short-term liabilities.
• Solvency ratios: these measure the company’s ability to fulfill long-term liabilities.
• Profitability ratios: these measure return on investment.
• Valuation ratios: these evaluate the market value of the company’s shares.

He leads us further to identify several important ratios we should know, and we do a group class exercise to apply them. Inventory turnover, Return on Equity, Accounts receivable turnover, quick ratio, common ratio, and several others were applied in the exercise.  Thus, gradually I am becoming immersed in the world of corporate finance. We are becoming skilled in asking the right questions and looking at critical ratios. Prior to these, we had practiced horizontal and vertical analyses. I must always keep in mind that the prior year is always subtracted from the current year and that the prior year is always the divisor.

On Tuesday 4^th, Francis Okoye introduced the concept of linear programming which is essentially how to optimize the outcome of a process with defined variables. He shows us how to compute the linear equation in Excel and we practice it. We clearly see the practical use of the concept. The aim is to optimize our objectives given a set of constraints.

My lack of words to fully explain linear programming this night is indicative of my need to quickly read through the PowerPoint and practice more. This journaling after all is useful for keeping tabs on lessons learned each week.