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.
Overview
Syllabus
Introduction
- What is financial statement analysis?
- Common methods of analysis
- The accounting equation
- Reading the balance sheet
- Reading the income statement
- Evaluating the statement of cash flows
- Determining return on equity
- Applying the DuPont framework
- Example: Ford vs. General Motors
- Common-size overview
- Common-size income statement
- Common-size balance sheet
- Example: Walmart 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?
Taught by
Jim Stice and Kay Stice