ACCT_102_Lecture_Notes_Chapter_13_F2010[1] - ACCT 102...

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1 ACCT 102 – Fundamentals of Acct II Lecture Notes – Chapter 13: ANALYZING FINANCIAL STATEMENTS Schmidt BASICS OF ANALYSIS Purpose of Analysis Who analyzes financial statements? 1. Internal users, such as management, internal auditors, and consultants use financial statement analysis to improve company efficiency and effectiveness in providing products and services. 2. External users, such as stockbrokers and lenders, to make better and more informed investing and lending decisions. 3. Others, such as suppliers, to establish credit terms, or analyst services such as Standard & Poor’s, in making buy-sell ratings on stocks and in setting credit ratings. Information for Analysis External users rely on the financial statements (the income statement, balance sheet, statement of retained earnings, statement cash flows, and the notes to the financial statements), for the data needed to perform financial analyses. Internal users receive special reports not available to those outside the company. Standards for Comparison Data derived from financial analysis is not useful unless compared to a benchmark. Common benchmarks are: 1. Intracompany: Comparing data from the current year to the prior years for the company analyzed can indicate useful trends in performance. 2.
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This note was uploaded on 03/08/2012 for the course ACCT 102 taught by Professor during the Winter '12 term at Cerritos College.

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ACCT_102_Lecture_Notes_Chapter_13_F2010[1] - ACCT 102...

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