Financial+Statement+Analysis_1

Financial+Statement+Analysis_1 - Financial Statement...

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The University of Tennessee 1 Financial Statement Analysis A. Financial Statement Analysis B. “Watch Out” - Make Sure You Are Comparing Apples to Apples C. How Financial Ratios Can Be Used D. Sources of Performance Data E. Decomposition (DuPont) Analysis F. Trend Analysis G. Common Size Statements H. Indexed Statements I. Types of Financial Ratios
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The University of Tennessee 2 Financial Statement Analysis Financial statements are used, like a barometer, to provide insight into the health (current status) of a company. This data, along with other information, can than be used by creditors, investors, and management to make credit decisions, assess a firm’s future potential, and identify problem areas and strategic opportunities. Ratio analysis is one of the many TOOLS we can use!!!
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The University of Tennessee 3 Financial Statement Analysis “Watch Out” “Make Sure You Are Comparing Apples to Apples” - Why compare yourself to the mean? Pick the “right” peer group. Are the company’s objectives the same? - How are the underlying data generated? - Don’t chase numbers at any cost (i.e., don’t create ratios just to “compare numbers”). -
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Financial+Statement+Analysis_1 - Financial Statement...

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