Analysis and Uses of Financial Statements - v11 (Course Id 1360)

Accounting - Accounting for Course Id 1360

Analysis and Uses of Financial Statements is designed for interested parties who must understand how to read, interpret, and analyze financial statements. This course describes in clear, concise, and understandable language the intricacies of financial statements, and their use by investors, creditors, analysts, and other interested parties.

This course can enhance your chance for success in business and investing; by enabling you to profit from the knowledge, insights, and perceptions of professionals who use financial statement analysis tools and techniques on a day-to-day basis. Realistic examples and illustrations of financial statement analysis are widely used in this course to make the subject matter crystal clear. That is the major objective of this course.

This course explains the objectives of financial statements in a meaningful manner. The accounting principles used in compiling financial statements and the qualitative characteristics of data appearing on financial statements are relevantly and reliably described. After a thorough overview of financial statements, major tools and techniques as explained, including:

• Horizontal and vertical analysis
• Common-size statements
• Ratio analysis
• Liquidity and activity ratios
• Profitability ratios
• Capital structure and solvency ratios
• Market test ratios
• Cash flow ratios

The significance of interim financial statements and segment reporting is explored, as are analysis of annual reports and management discussion and analysis (MDA). The analytical techniques discussed in this course are well within the limits of today’s information technology. Once the concepts are understood, software can be used to eliminate much of the computational tedium involved.

NASBA QAS - Text - Technical - NASBA Registry - 1360

Chapter 1
Objectives of Financial Statement Analysis and Financial Reporting

• State the objectives of financial reporting.
• Recognize the qualitative characteristics of accounting information.

Chapter 2
Accounting Assumptions, Principles, Procedures and Policies

• Recognize the basic assumptions of accounting.
• Identify the basic principles of accounting.

Chapter 3
Understanding Financial Statements

• Recognize the basic financial statements.
• Identify the key balance sheet items portraying a company's financial position.
• Recognize the most important items on the statement of cash flows.
• Identify the annual report components (e.g. financial statements, footnotes, auditor's report)
• Assess a company's cash inflows and cash outflows.

Chapter 4
An Overview of Financial Statement Analysis

• Recognize the important aspects of financial statement analysis.
• Compare horizontal analysis and vertical analysis.
• Identify the basic components of ratio analysis.
• Identify the limitations of ratio analysis.

Chapter 5
Analysis of Liquidity and Activity

• Recognize different liquidity ratios and how they can be used to compare companies.
• Compute and interpret liquidity ratios used to analyze a company’s ability to pay debt.
• Compute and interpret activity ratios.
• Recognize how inventory and receivable factors will affect business analysis and comparisons.

Chapter 6
Analysis of Solvency and Capital Structure

• Identify different structure ratios used to analyze the capital structure of a company.
• Recognize operating leverage and financial leverage.
• Recognize how financing, debt and interest affect company analysis and performance.

Chapter 7
Profitability Analysis

• Recognize and apply key ratios related to profitability.
• Identify how to compute return on investment (ROI), and how to enhance ROI.
• Recognize how return on assets can be used to assess management performance.

Chapter 8
Market Strength and Overall Evaluation

• Recognize a wide range of market test ratios used to measure market strength of a company.
• Recognize how market test ratios evaluate a company’s financial performance.

Chapter 9
Analysis of Cash Flows

• Recognize the key items on the statement of cash flows to analyze company performance.
• Identify and apply the major ratios used to evaluate the cash flow of a company.

Chapter 10
Interim Statements and Segment Analysis

• Recognize the accounting associated with interim reporting.
• Identify the disclosure requirements for major segments of a business.

Chapter 1:    Objectives of Financial Statement Analysis and Financial Reporting

Learning Objectives

The Focus of Financial Statement Analysis

Investor’s Needs

Framework for Financial Reporting

Summary

Chapter 1 Review Questions

Chapter 2:    Accounting Assumptions, Principles, Procedures and Policies

Learning Objectives

Accounting Assumptions

Accounting Principles

Accounting Procedures and Policies

Other Accounting Considerations

Summary

Chapter 2 Review Questions

Chapter 3:    Understanding Financial Statements

Learning Objectives

What and Why of Financial Statements

Consolidated Financial Statements

The Balance Sheet

The Income Statement

Retained Earnings Statement

Statement of Cash Flows

Other Sections of the Annual Report

The Sarbanes-Oxley Act

Summary

Chapter 3 Review Questions

Chapter 4:    An Overview of Financial Statement Analysis

Learning Objectives

Basic Considerations

Major Tools of Analysis

Sources of Information

Comparative Financial Statements

Ratio Analysis

Cash Flow Analysis

Specialized Analytical Tools

Summary

Chapter 4 Review Questions

Chapter 5:    Analysis of Liquidity and Activity

Learning Objectives

Liquidity Ratios

Activity Ratios

Operating Cycle of a Business

Interrelationship of Liquidity and Activity to Earnings

Other Considerations

Summary

Chapter 5 Review Questions

Chapter 6:    Analysis of Solvency and Capital Structure

Learning Objectives

Solvency (Leverage and Debt Service)

Leverage

Cash Flow Ratios and Solvency

Summary

Chapter 6 Review Questions

Chapter 7:    Profitability Analysis

Learning Objectives

Quality of Earnings

Return on Investment

Summary

Chapter 7 Review Questions

Chapter 8:    Market Strength and Overall Evaluation

Learning Objectives

Earnings per Share

Market Test Ratios

Other Considerations

An Overall Evaluation

Summary

Chapter 8 Review Questions

Chapter 9:    Analysis of Cash Flows

Learning Objectives

Preparing and Analyzing the Statement of Cash Flows

Trend Analysis and Industry Comparison

Cash Flow Coverage (Adequacy) Ratios

Cash Flow Performance Measures

Summary

Chapter 9 Review Questions

Chapter 10:    Interim Statements and Segment Analysis

Learning Objectives

Interim Financial Report

Segment Reporting

Summary

Chapter 10 Review Questions

Glossary