Acct%202200%20Chapter%2016%20Lecture%20Notes.Students

Acct%202200%20Chapter%2016%20Lecture%20Notes.Students -...

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Acct 2200 Chapter 16 Lecture Notes Financial Statement Analysis Learning Objectives: 1. Prepare and interpret financial statements in comparative and common-size form. 2. Compute and interpret financial ratios that would be useful to a short-term creditor. Financial statement analysis involves examining trends in key financial data, comparing financial data across companies, and analyzing financial ratios to assess the financial health and future prospects of a company. Part I. Financial Statements in Comparative and Common-Size Form McGraw-Hil /Irwin Slide 5 Statements in Comparative and Common- Size Form Dollar and percentage changes on statements Common-size statements Ratios An item on a financial An item on a financial statement has little statement has little meaning by itself. The meaning by itself. The meaning of the numbers meaning of the numbers can be enhanced by can be enhanced by drawing comparisons. drawing comparisons. 1. Horizontal analysis (or trend analysis)
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Acct%202200%20Chapter%2016%20Lecture%20Notes.Students -...

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