About This Chapter
Analyzing Financial Statements - Chapter Summary and Learning Objectives
Accurately interpreting financial statements and records is a crucial responsibility tasked to accounting professionals. Evaluate some of the various methods used to analyze financial statements in these interactive lessons. As you thoroughly examine each method, you'll be given an opportunity to assess your comprehension through the lesson quizzes and chapter exam. In this chapter, you'll learn about:
- The purpose, categories and issues of financial statement analysis
- Standards used for comparison when analyzing financial statements
- Applying the horizontal and vertical analysis methods
- Assessing rate debt and business credit status
|Financial Statement Analysis: Definition, Purpose, Elements & Examples||Dissect the elements of financial statement analysis and calculate financial ratio.|
|Standards for Comparison in Financial Statement Analysis||Break down the four standards in ratio comparison and where to find the data.|
|Applying Horizontal Analysis Methods||Calculate horizontal analysis and interpret the results using a commonly used financial statement.|
|Applying Vertical Analysis Methods||Assess the vertical analysis method and measure the results.|
|Using Financial Analysis to Assess Business Credit Status||Illustrate how financial statement analysis can be used to assess a business's creditworthiness.|
|Using Financial Analysis to Rate Debt||Diagram financial statement components and commonly used ratios to calculate an example scenario.|
|Issues with Financial Statement Analysis||Debate the issues encountered when analysis financial statement ratios and conclude how you can ensure you're comparing similar ratios.|
1. Financial Statement Analysis: Definition, Purpose, Elements & Examples
In this lesson, we'll define financial statement analysis and discuss the main categories. You'll also learn how to calculate a financial ratio in each category and analyze the results.
2. Standards for Comparison in Financial Statement Analysis
In this lesson, you'll understand the purpose of comparing ratio data. We'll discuss four standards in comparing ratios; you'll learn about ratios in each category and where to find the data.
3. Applying Horizontal Analysis Methods
In this lesson, we'll define horizontal analysis. You'll learn about the most widely used financial statements to complete the analysis. We'll also discuss how to calculate horizontal analysis and interpret the results.
4. Applying Vertical Analysis Methods
In this lesson, we'll define vertical analysis. You'll learn about the most widely used financial statements to complete the analysis. We'll also discuss how to calculate vertical analysis and interpret the results.
5. Using Financial Analysis to Assess Business Credit Status
A lender needs to ensure that a company to whom it extends credit will be able to repay the amounts it borrows. In this lesson, you'll learn how a lender assesses a business's credit status.
6. Using Financial Analysis to Rate Debt
Financial analysis is a tool used by potential investors to assess investments they're considering. In this lesson, you will learn about financial ratios that can be used to assess debt.
7. Issues with Financial Statement Analysis
In this lesson, we'll define financial statement ratios. You'll also learn some of the issues in analyzing financial statement ratios, as well as suggestions on how to make sure you're comparing apples to apples.
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Other chapters within the Accounting 302: Advanced Accounting course
- Business Ownership Types
- Key Accounting Concepts
- Journals & Ledgers in Accounting
- Accounting Equations & Formulas
- Financial Statements, Balance Sheets & Income Statements
- Financial Statement Ratios
- Accounting for Inventory
- Accounting for Depreciation
- Accounting for Compensation, Taxes & Liabilities
- Adjustments & Closing Entries
- Corporate Accounting
- Departmentalized Accounting
- Taxation for Corporations
- Business & Financial Forecasting
- Required Assignments for Accounting 302
- Studying for Accounting 302