chapter 1 book notes

chapter 1 book notes - Chapter 1 Types of Business Analysis...

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Chapter 1 Types of Business Analysis Two major types: Credit and Equity Credit analysis: Creditors lend funds in 2 ways -Trade creditors: deliver goods or services to a company -Nontrade creditors: provide financing to a company with repayment w/ interest -they focus on liquidity (ability to raise cash short term) and solvency (ability to pay long term obligations) Equity Analysis: provides funds to a company in return for risks/rewards of ownership -technical analysis: search for patterns in price/volume history of a stock to predict future movement -fundamental analysis: more wide accepted. ..process of determining the value of a company by analyzing and interpreting key factors for the economy, industry, and company. ..main goal is to determine INTRINSIC value Minor types: Processes of Business Analysis Business Environment and Strategy Analysis -industry analysis: analyze the industry of the company -strategy analysis: analyze the strategy of the company and compare to its competitors Three parts of BE&S Analysis: Accounting, Financial, and Prospective Analysis -combined they are Financial Statement Analysis Accounting Analysis -the process of evaluating the extent to which a company’s accounting reflects economic reality -assessing effects of accounting policies on financial statements, and adjusting accordingly for analysis -lack of uniformity in accounting practices leads to comparability problems -accounting distortions are deviations of accounting info from the underlying economies. .these
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This note was uploaded on 07/04/2011 for the course FINA 470 taught by Professor Austin during the Spring '11 term at South Carolina.

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chapter 1 book notes - Chapter 1 Types of Business Analysis...

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