The objective of this course is to introduce students to financial statement analysis from the point of view of the primary and everyday users of financial statements: company management, lenders, and investors. This course focuses on the aspects of effective analysis of financial statements and it introduces the analytical tools to assess a company’s performance, the concept of quality of earnings, approaches to valuation, and other issues. Particular emphasis is placed on revenue recognition, earnings quality, cash flow, and ratio analysis. Students gain an understanding of the biases and limitations of financial statements. Also students will review the concepts of common-size statements, benchmarking, and trend analysis.
Upon completion of this course, the successful student should able to:
- Evaluate a company’s performance in comparison to peers based on a thorough review of the balance sheet, income statement, and statement of cash flows.
- Interpret the financial results of a company to gain a solid understanding of financial performance and make informed decisions in two key areas: investment and financing.
- Analyze earnings quality and differentiate between core and non-core earnings and activities
- Review the footnotes section of an annual report for contingencies and material disclosures
- Understand the relationship between risk and return and how financial statements impact risk-return analyses.