Financial Statement Analysis Workshop

Course Outline

• Required 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 reporting standards
  • Importance of reporting standards in security analysis and valuation
  • The standards setting bodies
  • International Financial Reporting Standards (IFRS) versus Generally Accepted Accounting Principles (GAAP)
• An inside look at financial statements
  • Income statement components
  • The three important components of income statements
  • Revenue and expense recognition
  • Balance sheet components
    • Measurement and classification
    • The five important components of a balance sheet
  • Statement of changes in owners equity
  • Cash flow statement:
    • Operating, investing, and financing activities
    • Direct versus indirect methods in cash flow preparation
    • Reading and interpreting cash flow
    • The cash rich standard
• Mechanisms of financial analysis techniques
  • • Vertical analysis and strategy: balance sheet and income statement approaches
    • Horizontal, trend analysis and growth
    • Liquidity analysis:
      • Current, quick, and cash ratios, defensive interval and cash conversion cycle
    • Asset management and activity ratios:
      • Total and fixed assets turnover
    • Solvency analysis:
      • Debt, equity, and times interest earned ratios
    • Profitability analysis:
      • Profit margin, gross margin, return on assets, return on equity
    • Market and valuation:
      • Price earnings and earnings-per-share ratios
    • DuPont analysis: the three-step and five-step models
    • Limitation of ratio analysis
• Financial statement analysis: applications and presentations
  • • Evaluating a company’s past performance
    • Comprehensive real life analysis of publicly traded companies