Analysis & Uses of Financial Statements - Introduction

Author: Dr. J Shim - Delta Publishing
Copyright © 2010

Field of Study: Accounting
Level: Basic
Recommended CPE Credit 5 hours
Prerequisites: None
Advanced Preparation: None
Type of Delivery: Self-Study
Expiration: Course expires 1 year after purchase
Course Update: June, 2009
Accreditation: QAS, NASBA
Guarantee/Complaint Resolution

Course Outline


Lesson 1 - Objectives of Financial Statement Analysis and Financial Reporting
Learning Objectives 1
Introduction 1
Focus of Financial Statement Analysis
Assessment of Past and Current Position
Assessment of Future Potential and Related Risk
Investor's Needs
Objectives of Financial Reporting
Qualitative Characteristics of Accounting Information
Summary


Lesson 2 - Accounting Assumptions, Principles, Procedures, and Policies
Learning Objectives 2
Accounting Assumptions
Accounting Principles
Accounting Procedures and Policies
Other Accounting Considerations
Summary Lesson 2


Lesson 3 - Understanding Financial Statements
Learning Objectives 3
Introduction 3
What and Why of Financial Statements
Consolidated Financial Statements
The Balance Sheet
Assets
Liabilities
Stockholders' Equity
Off-Balance Sheet Items
Balance Sheet Limitations
The Income Statement
Retained Earnings Statement
Statement of Cash Flows
Contents of the Statement of Cash Flows
Other Sections of the Annual Report
The Auditors' Report
Notes to the Financial Statements (Footnotes)
Management's Discussion and Analysis (MD and A)
The Sarbanes Oxley Act
Key Points of Auditing Standard No. 5
Summary Lesson 3


Lesson 4 - An Overview of Financial Statement Analysis
Learning Objectives 4
Introduction 4
Basic Considerations
Major Tools of Analysis
Sources of Information
Comparative Financial Statements
Ratio Analysis
Cash Flow Analysis
Specialized Analytical Tools
Summary Lesson 4


Course Objectives

Lesson - 1
After reading this chapter, you should be able to:
1. Cite some real-life scenarios and understand why financial statement analysis is necessary to solve some puzzles presented by these scenarios.
2. Describe the focus of financial statement analysis.
3. Outline the information needs of investors and creditors.
4. State the objectives of financial reporting.
5. Identify the qualitative characteristics of accounting information.
Lesson - 2
After reading this chapter, you should be able to:
1. Describe the basic assumptions of accounting.
2. Explain the application of the basic principles of accounting.
3. Explain the meaning of generally accepted accounting principles.
4. Differentiate the cash basis of accounting from the accrual basis of accounting.
5. Describe the impact that constraints have on reporting accounting information.
An understanding of the assumptions, principles, procedures, and polices underlying financial statements will be helpful in understanding the nature and scope of financial statement analysis. In this chapter, accounting assumptions, principles, procedures, and policies will be discussed.
Lesson - 3
After reading this chapter, you should be able to:
  • Interpret the basic financial statements: the balance sheet, income statement, and statement of cash flows.
  • Explain how the balance sheet portrays a company's financial position.
  • Describe how the income statement reveals the entity's operating performance.
  • Determine and assess a company's cash inflows and cash outflows.
  • State the many types of accounts that may exist in the accounting system.
  • Outline the usefulness of the statement of cash flows.
  • Explain what the annual report is and read and understand its components, including the financial statements, footnotes, review of operations, auditor's report, and supplementary schedules
  • Summarize how the Sarbanes-Oxley 404 reporting differs from traditional reporting.
Lesson - 4
After reading this chapter, you should be able to:
  • Explain what financial statement analysis is and why it is important.
  • Compare horizontal analysis and vertical analysis.
  • List the basic components of ratio analysis.
  • Distinguish between trend analysis, industry comparison, and benchmarking.
  • Calculate a comprehensive set of financial ratios and interpret them.
  • Explain the limitations of ratio analysis.