Overview
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Learn the ins and outs of financial statement analysis—the examination of relationships among financial statement numbers—to gain insights into your company's past and future.
Syllabus
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Introduction
- What is financial statement analysis?
- Common methods of analysis
- What you should know
- The accounting equation
- Balance sheet
- Income statement
- Statement of cash flows
- Return on equity
- The DuPont framework
- Example: Ford vs. General Motors
- Common size overview
- Common size income statement
- Common size balance sheet
- Example: Wal-Mart vs. Target
- The many ways to define income and profit
- Example: Nordstrom vs. Microsoft
- The operating cycle
- Days' sales of inventory (DSI)
- Average collection period
- Examples: Harley and McDonald's
- Current ratio in theory and practice
- The many debt ratios
- Example: Comparing tech company debt ratios
- Limits to using past performance
- Pitfalls of financial statement analysis
- Avoid the temptation of a single reason
- What's next?
