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Course Details

The Interpretation of Financial Statements (Course Id 793)

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Author : Steven Bragg, CPA
Status : Production
CPE Credits : 11.0
IRS Credits : 0
Price : $103.95
Passing Score : 70%
Primary Subject-Field Of Study:

Finance - Accounting and Auditing for Course Id 793

Description :

This course describes the structure of the financial statements, notes a number of tools for extracting information from the statements, and provides a wealth of additional insights into the reasons for the presence of or changes in certain numbers within the statements.

Usage Rank : 0
Release : 2015
Version : 1.0
Prerequisites : None
Experience Level : Overview
Additional Contents : Complete, no additional material needed
Additional Links :
Advance Preparation : None
Delivery Method : Self-Study
Intended Participants : Anyone needing Continuing Professional Education (CPE)
Revision Date : 27-May-2015
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - NASBA Registry - 793

Keywords : Finance, Interpretation, Financial, Statements, cpe, cpa, online course
Learning Objectives :

Course Learning Objectives

    • Recognize the accrual basis of accounting concept and how it functions, as well as the accounting equation concept.
    • Note the business situations indicated by different cash levels and cash designations.
    • Cite the uses of the contribution margin and days sales outstanding measurements, as well as the situations in which they can be misleading.
    • Note the industry situations in which an investment in inventory is considered to be more or less critical, as well as the reasons for different inventory turnover levels.
    • Cite the calculations used for the different depreciation methods, and the effects on profitability of the various depreciation rules.
    • State the contents of the prepaid expenses line item, as well as the situations that can change this balance. Also note the circumstances under which goodwill is considered to be impaired.
    • Identify the business conditions that can alter the balances in the current liabilities line items.
    • Identify the circumstances causing a change in debt classification, as well as the situations in which the debt level can be considered minor.
    • Note the effects of debt-to-equity conversions on measurements, as well as the contents of the book value and tangible book value measurements.
    • Recognize the situations causing reliable sales, as well as the types of investors attracted to rapid sales growth.
    • Identify the contents of the cost of goods sold, and the methods used to improve the gross margin percentage.
    • Define the contents of operating expenses, and the business situations that can cause these line items to change.
    • Recognize the situations in which net operating losses may be generated, and the techniques used to improve the net profit margin and earnings per share.
    • Note the contents of the different classifications within the statement of cash flows.
    • Identify the types of audit examinations, the uses to which the margin of safety can be put, and the contents of the dividend analysis formulas.
    • Note the required contents of the different sections of the Form 10-K.

Chapter 1
Overview of the Financial Statements

Recognize the accrual basis of accounting concept and how it functions, as well as the accounting equation concept.

Chapter 2
Interpretation of Cash and Investments

Note the business situations indicated by different cash levels and cash designations.

Chapter 3
Interpretation of Receivables

Cite the uses of the contribution margin and days sales outstanding measurements, as well as the situations in which they can be misleading.

Chapter 4
Interpretation of Inventory

Note the industry situations in which an investment in inventory is considered to be more or less critical, as well as the reasons for different inventory turnover levels.

Chapter 5
Interpretation of Fixed Assets

Cite the calculations used for the different depreciation methods, and the effects on profitability of the various depreciation rules.

Chapter 6
Interpretation of Other Assets

State the contents of the prepaid expenses line item, as well as the situations that can change this balance. Also note the circumstances under which goodwill is considered to be impaired.

Chapter 7
Interpretation of Current Liabilities

Identify the business conditions that can alter the balances in the current liabilities line items.

Chapter 8
Interpretation of Debt

Identify the circumstances causing a change in debt classification, as well as the situations in which the debt level can be considered minor.

Chapter 9
Interpretation of Equity

Note the effects of debt-to-equity conversions on measurements, as well as the contents of the book value and tangible book value measurements.

Chapter 10
Interpretation of Sales

Recognize the situations causing reliable sales, as well as the types of investors attracted to rapid sales growth.

Chapter 11
Interpretation of the Cost of Sales and Gross Margin

Identify the contents of the cost of goods sold, and the methods used to improve the gross margin percentage.

Chapter 12
Interpretation of Operating Expenses

Define the contents of operating expenses, and the business situations that can cause these line items to change.

Chapter 13
Interpretation of Other Income, Taxes, and Profits

Recognize the situations in which net operating losses may be generated, and the techniques used to improve the net profit margin and earnings per share.

Chapter 14
Interpretation of Cash Flows

Note the contents of the different classifications within the statement of cash flows.

Chapter 15
Other Analysis Topics

Identify the types of audit examinations, the uses to which the margin of safety can be put, and the contents of the dividend analysis formulas.

Chapter 16
Additional Public Company Information

Note the required contents of the different sections of the Form 10-K.
Course Contents :

Chapter 1 - Overview of the Financial Statements

The General Ledger

The Accrual Basis of Accounting

Costs versus Expenses

The Balance Sheet

The Income Statement

The Statement of Cash Flows

Interactions between the Financial Statements

Financial Statement Footnotes

Interpretation Tools

Ratio Analysis

Horizontal Analysis

Experience

Chapter 2 - Interpretation of Cash and Investments

The Interpretation of Cash and Investments

Natural Cash Balance

Relevance of a Low Cash Figure

Restricted Cash

Events Triggering Changes in Cash

Sources of Cash

The Impact of Sales Growth on Cash

Sufficiency of the Cash and Investment Balance

The Liquidity of Investments

The Return on Investment

Analysis Conclusions

Chapter 3 - Interpretation of Receivables

The Interpretation of Accounts Receivable

Inherent Profit Margin

Age of the Trade Receivables

Age of the Other Accounts Receivable

No Allowance for Doubtful Accounts

Reliability of the Allowance for Doubtful Accounts

No Allowance for Other Accounts Receivable

Amount of Bad Debts Recognized

Analysis Conclusions

Chapter 4 - Interpretation of Inventory

The Interpretation of Inventory

Relative Importance of Inventory

Age of the Inventory

Reality of the Ending Balance

Type of Costing System Used

Ownership of the Inventory

Reliability of the Reserve for Obsolete Inventory

Amount of Obsolete Inventory and Inventory Adjustments Recognized

Analysis Conclusions

Chapter 5 - Interpretation of Fixed Assets

The Interpretation of Fixed Assets

Depreciation Method

Existence of Depreciation

Sufficiency of Depreciation

What is Being Capitalized

What is Being Derecognized

Proportion of Sales to Fixed Assets

Cash Flow Support of Fixed Assets

Proportion of Repairs to Fixed Assets

Analysis Conclusions

Chapter 6 - Interpretation of Other Assets

The Interpretation of Prepaid Expenses

Nature of the Account Contents

The Increasing Account Balance

The Impact of Sales Growth on Prepaid Expenses

The Interpretation of Goodwill

Goodwill Impairment

Goodwill Amortization

Analysis Conclusions

Chapter 7 - Interpretation of Current Liabilities

The Interpretation of Current Liabilities

Days Payables Outstanding

Changes in Payable Days

Sales Tax Payables Issues

Dividends Payable Issues

Wages Payable Issues

Income Taxes Payable Issues

Warranty Liability Issues

Unearned Revenues

Analysis Conclusions

Chapter 8 - Interpretation of Debt

The Interpretation of Debt

Financial Leverage

Debt-Equity Ratio

Interest Coverage Ratio

Relative Size of Debt

Seasonal Borrowings

Line of Credit Usage

Shifts from Long-term to Short-term Debt

Conversions from Payables to Debt

Conversions from Debt to Equity

Debt Forgiveness

Permanent Debt

Offshore Cash

Analysis Conclusions

Chapter 9 - Interpretation of Equity

The Interpretation of Equity

The Book Value Concept

Tangible Book Value

Book Value per Share

Changes in Retained Earnings

Negative Retained Earnings

Appropriated Retained Earnings

Treasury Stock Usage

Number of Shares Authorized and Outstanding

Analysis Conclusions

Chapter 10 - Interpretation of Sales

The Interpretation of Sales

The Trend of Sales

The Quality of Sales

The Reliability of Sales

The Timing of Revenue Recognition

Revenue at Gross or Net

Orders versus Sales

The Presence of Sales Discounts

The Trend of Sales Returns

Analysis Conclusions

Chapter 11 - Interpretation of the Cost of Sales and Gross Margin

The Interpretation of the Cost of Sales and Gross Margin

Gross Margin Analysis

Contribution Margin Analysis

The Inventory Build Concept

Direct Materials Changes

Obsolete Inventory Changes

Scrap Changes

Direct Labor Changes

Factory Overhead Changes

Freight In Changes

Analysis Conclusions

Chapter 12 - Interpretation of Operating Expenses

The Interpretation of Operating Expenses

Horizontal Analysis

Strategy Impact on Operating Expenses

Research and Development Costs

Payroll Tax Wage Cap Issues

Commission Fluctuations

Non-Cash Operating Expenses

Rent Subleases

Supplies Expense and the Capitalization Limit

The Fixed Nature of Compensation in Operating Expenses

The Public Company Impact on Operating Expenses

Analysis Conclusions

Chapter 13 - Interpretation of Other Income, Taxes, and Profits

The Interpretation of Other Income, Taxes, and Profits

Implications of Interest and Dividend Income

Implications of Gains/Losses on Asset Sales

Effects of Interest Expense

Implications of Taxable Income

Effective Tax Rate

Net Profit Ratio

Deflated Profit Growth

Core Earnings Ratio

Earnings per Share

Manipulation of Earnings per Share

Analysis Conclusions

Chapter 14 - Interpretation of Cash Flows

The Statement of Cash Flows

Overview of the Statement of Cash Flows

The Direct Method

The Indirect Method

Examination of Cash Flows from Operating Activities

Examination of Cash Flows from Investing Activities

Examination of Cash Flows from Financing Activities

Cash Flow Return on Sales

Analysis Conclusions

Chapter 15 - Other Analysis Topics

Financial Statement Audits, Reviews, and Compilations

Audit Opinions

Working Capital Analysis

Quick Ratio

Working Capital Productivity

Breakeven Point

Dividend Performance

Dividend Payout Ratio

Dividend Yield Ratio

Analysis Conclusions

Chapter 16 - Additional Public Company Information

The Form 10-K

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Company Stock

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Analysis Conclusions

Glossary

Finance Course 793 Home: https://www.cpethink.com/cpe-for-cpas
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