Chapter 12 Financial Statement Analysis

Chapter 12 Financial Statement Analysis - Chapter 12...

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12.1 Typology of analysis 12.2 Financial ratios Users of financial information: Managers Investors Auditors Tax authorities Competitors Financial analysts Creditors Each user has a different objective: financial statements analysis differs depending on the objective. Eg. *To assess income tax to be paid, CRA will analyze how the company accounts for the revenues and expenses. *To asses credit risks, a creditor analyzes the dependence of the firm on borrowed funds and the ability of that firm to repay the funds. Step 1 in financial statement analysis: Understanding the nature of the firms business What industries the company operates in? What is the competition like? Is the firm established or new? What is the size of the firm? Is the firm internationally diversified? What are the industry and firm specific risks? Why?
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Chapter 12 Financial Statement Analysis - Chapter 12...

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