Components of Financial Statement Analysis

• Role of financial reporting and analysis
• Core financial statements and the importance of the annual report
• The important role of notes and supplementary information
• Objectives of financial statements audit
• Types of audits
• Financial statement analysis framework
• The accounting cycle
• Financial reporting mechanics
• Relationship, elements and classification of financial statements

Financial Accounting & Reporting Standards

• Importance of reporting standards in equity analysis and valuation
• International Financial Reporting Standards (IFRS) versus Generally Accepted Accounting Principles (GAAP)
• Rules comparisons affecting analysis
• Applications and presentations of financial statement analysis
• Evaluating a company’s past performance
• Comprehensive real life analysis of publicly traded companies
• Comparing different industries

An Inside look at Financial Statements

• Important income statement elements
• Gross margin vs. operating profit vs. net income
• Revenues are earned and expenses are incurred
• Balance sheet elements
• The main six (6) parts of the balance sheet
• Definitions and examples
• Statement of changes in owners’ equity
• Cash flow statement:
• Operating, investing, and financing activities
• Two (2) methods of preparing cash flow statement
• Reading and interpreting cash flow
• The cash rich standard

Financial Analysis Techniques

• Strategic analysis is vertical analysis: balance sheet and income statement approaches
• Growth analysis is horizontal and trend analysis
• Importance of Liquidity analysis
• Current, quick, and cash ratios, defensive interval and cash conversion cycle
• Why perform asset management and activity ratios?
• Total and fixed assets turnover
• Gearing and Solvency analysis
• Debt, equity, and times interest earned ratios
• Business and Profitability analysis
• Profit margin, gross margin, return on assets, return on equity
• How good are Market ratios?
• Price earnings and earnings-per-share ratios
• DuPont analysis: the three-step and fivestep models
• Limitation of ratio analysis