How To Analyze A Financial Statement

1. Financial Statements - An Introduction

n  Steps to Analyze Financial Statements

n  Relation and Comparison of Accounting Data

2. Common Size Analysis

n  Common Size Profit & Loss Statement

n  Common Size Balance Sheet

n  Comparison of Common Size Statements

3. Index Based Analysis

n  Index Based Balance Sheet

n  Index Based Profit & Loss Statement

n  Comparison of Index Based Statements

4. Financial Statement Analysis Using Ratios

n  Profitability Ratios

n  Solvency Ratios

5. Comparison Using Financial Ratios

n  Short-Term Solvency Position

n  Operating Cycle Efficiency

n  Long-Term Solvency Position

n  Profitability and its Components

n  Use and Reliability of Financial Tools

n  Hidden Assumptions

n  Conceptual Diversity

Overview

There are some basic questions that an investor or a shareholder would have in mind while going through the financial statements of a firm:

Ø  What are the types of assets of an entity? How valuable are they? Can they be liquidated easily or will they become a risk for the entity over time?

Ø    What is the value of the debt of an entity in concern? How risky would it be for the entity?

Ø   What is the value of equity? How can it be of use to an entity?

This new edition answers all such queries that are universal to any firm in the world: from explaining the steps to analyze financial statements to analyzing their solvency ratios. However, this time, the readers will also be able to read and understand the index-based common size figures of real-life companies and analyze their solvency position.