Financial Statement Analysis Fundamentals

Financial Statement Analysis Fundamentals Fundamentals is a four-module series that guides you through the various techniques for analyzing the information on corporate financial statements. These include horizontal and vertical analysis, ratio analysis and trend analysis. These techniques allow you to build a more nuanced and

Financial Statement Analysis Fundamentals

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Financial Statement Analysis Fundamentals Fundamentals is a four-module series that guides you through the various techniques for analyzing the information on corporate financial statements. These include horizontal and vertical analysis, ratio analysis and trend analysis. These techniques allow you to build a more nuanced and comprehensive financial profile that you can then use to make sound credit decisions.

The first two modules will cover the basics of how to read and interpret a company’s financial statements — the balance sheet, the income statement, the statement of shareholders’ equity and the cash flow statement. Each of these statements contains vital information about the company.

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The balance sheet provides a snapshot of the company’s assets (tangible and intangible) and liabilities (debt and equity). Ideally, the left side of the equation should match the right side — this is what is called a “balance.”

Next, the income statement offers a detailed account of a company’s revenue earning. It is also referred to as the profit and loss statement. Finally, the statement of cash flow reveals the amount of cash and cash equivalent that circulates in and out of the company over a period of time, covering ongoing operational activities, external investment sources and the financing of assets.

By the end of these five modules, you will be able to use various ratios to evaluate the strength of a company’s finances, their profitability and creditworthiness. You will also learn how to identify potential credit risks in a corporate financial statement. To reinforce your newfound skills, the appendix includes complete financial statement exhibits for both ABC Corp and XYZ Corp.


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