About This Chapter
Financial Statement Analysis - Chapter Summary and Learning Objectives
Financial statements are undeniably important in the accounting world. Managers must know how to analyze these statements. In this chapter, get an overview of the methods used in financial statement analysis. Read through the brief lessons, developed by talented instructors, to better evaluate the analysis of different financial statements. This chapter also includes quizzes aimed at helping you test your knowledge. The topics in this chapter include:
- The horizontal method for analyzing statements
- Using the vertical method for balance sheets and income statements
- The formulas and ratios for liquidity
- How to use solvency ratios
|The Horizontal Method of Analyzing Financial Statements||Explain the horizontal method of analyzing and how to use it for different statements.|
|Using the Vertical Method to Analyze Financial Statements||Use the vertical method to analyze for balance sheets and income statements.|
|Using Liquidity Ratios & Formulas in Financial Analysis||Learn the formulas involved with liquidity ratios used to analyze financial statements.|
|Analyzing Financial Statements using Solvency Ratios||Explore the use of solvency ratios to analyze financial statements.|
1. The Horizontal Method of Analyzing Financial Statements
This lesson focuses on horizontal analysis, which is used to compare financial balances over time. Following this lesson, you'll be able to explain how to use the analysis for a balance sheet, income statement, and retained earnings statement.
2. Using the Vertical Method to Analyze Financial Statements
This lesson focuses on vertical analysis, which is used to compare items in the same financial statement. After this lesson, you'll be able to explain how to use the analysis for a balance sheet and income statement.
3. Using Liquidity Ratios & Formulas in Financial Analysis
In this lesson, we'll define liquidity and discuss three financial ratios to determine a company's liquidity: current, quick and operating cash. You'll also learn how to calculate and analyze the ratios.
4. Analyzing Financial Statements using Solvency Ratios
In this lesson, we'll define solvency and learn about three solvency ratios: debt, equity, and debt to equity.We'll also learn how to analyze each ratio and determine if a high or low ratio is positive or negative.
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Other chapters within the Accounting 301: Applied Managerial Accounting course
- Corporate Governance for Managerial Accounting
- Financial Statements & Balance Sheets
- Cost Classifications
- Manufacturing Overhead Cost Allocation
- Job Order Cost System
- Process Cost System
- Activity-Based Costing
- Cost-Volume-Profit Analysis
- Decision Making in Managerial Accounting
- Pricing Objectives & Methods
- Budgetary Control
- Standard Costs
- Capital Budgeting
- Statement of Cash Flows
- Software for Managerial Accounting
- Required Assignments for Accounting 301
- Studying for Accounting 301