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Ch 6: Analyzing Financial Statements

About This Chapter

Study the lessons featured in this chapter to identify various methods for analyzing financial statements. Assess your comprehension of these techniques using the supplemental lesson quizzes and chapter exam.

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

LessonObjective
Financial Statement Analysis: Definition, Purpose, Elements & ExamplesDissect the elements of financial statement analysis and calculate financial ratio.
Standards for Comparison in Financial Statement AnalysisBreak down the four standards in ratio comparison and where to find the data.
Applying Horizontal Analysis MethodsCalculate horizontal analysis and interpret the results using a commonly used financial statement.
Applying Vertical Analysis MethodsAssess the vertical analysis method and measure the results.
Using Financial Analysis to Assess Business Credit StatusIllustrate how financial statement analysis can be used to assess a business's creditworthiness.
Using Financial Analysis to Rate DebtDiagram financial statement components and commonly used ratios to calculate an example scenario.
Issues with Financial Statement AnalysisDebate the issues encountered when analysis financial statement ratios and conclude how you can ensure you're comparing similar ratios.

7 Lessons in Chapter 6: Analyzing Financial Statements
Test your knowledge with a 30-question chapter practice test
Financial Statement Analysis: Definition, Purpose, Elements & Examples

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.

Standards for Comparison in Financial Statement Analysis

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.

Applying Horizontal Analysis Methods

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.

Applying Vertical Analysis Methods

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.

Using Financial Analysis to Assess Business Credit Status

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.

Using Financial Analysis to Rate Debt

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.

Issues with Financial Statement Analysis

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.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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