Financial Statement Analysis

Course Overview

Financial Statement Analysis is the practice of analyzing financial statement data. This is done for different reasons and using different methodologies. We will study some of the analytic tools used in financial statement analysis, see how this practice helps different groups involved in business, how to construct a report off of financial data, and what conclusions an analyst can or will come to, when the analyst is constructing their report.

In Manhattan Review’s course, you will learn how to apply accounting, economics, and finance concepts to the analysis of a company’s financial position and performance based on actual financial statements. We will learn how to effectively analyze and interpret a company’s performance based on financial data and its relevance to its market and economy. We will see if a company is creating value and learn some methods for determining a company’s value and how to see value creating opportunities in financial statement data. This course requires that the student have some understanding of both economics and accounting as many of the activities involved will be deeply economic in nature and the exercises will require some knowledge of accounting.

We will examine some major accounting scandals to see where the accounting or finance teams may have gone wrong and also look at cash flow analysis to see its importance in financial data. We will review how to read a statement, and take a look at what a financial analyst does in his or her career. We will look at risk assessment, expenses and bankruptcy detection.

We will see how financial statement analysis works for both investors and business alike. If financial statement analysis works for investors in that they can determine what companies they can invest in, then it can be equally good for the companies to determine their progress and position in their section of the market. Financial Statements help both investors and companies to identify red flags in their data

You will have the chance, or be encouraged to apply your newly developed analytical skills to different companies and different industries in order to broaden the scope of the training you will receive. Your ability to stretch you abilities to cover different industries will assist you in your careers later.

The principal goals of this course it to make you able to valuate a firm based on an analysis of financial data. You will be able to assess the profitability and risk of a firm, and project the financial future of the firm. You will be able to do so independently of global, political, and technological pre dispositions in a purely objective analytical way.

Making assertions based on your analysis of financial data will allow you to use the knowledge you have of many different business disciplines. While it is mostly based on quantitative analysis and mathematical tools to solve financial problems and make predictions based on data, you will see how the information in a financial statement affects an economy, how marketing can affect the outcome of the data seen in the statement, and how business strategy affects the outcome of the data. Since financial statements can be used to inform, they can also be used to mislead. Through some of our case studies we will see how data can be misrepresented in an introduction to issues of legality and ethics in financial statements. Whatever your future career whether it be in accounting or finance, or if you are an analyst, consultant, CPA or corporate manager. The ability to analyze a firm based on data using quantitative analytical methods is crucial to anyone working in any business discipline.

Topics Covered

  • Methods
  • Contexts
  • Ethics
  • Quantitative Tools
  • Forecasting
  • Overview of Financial Statement Analysis
    •  Accounting Income and Assets
    •  Analysis of cash flows
    •  Ratios and financial analysis
    •  Empirical Research
    •  Assets: Inventories, Capitalization and Depreciation of Assets
  •  Liabilities: Income Taxes, Financing Liabilities, Leases, Off-Balance Sheet Debt, Pensions
    •  Inter-corporate Investments, Business Combinations, Multinational Operations
    •  Derivatives and Hedging