Financial Statement Analysis
Assess business performance through analysis of financial statements, as well as valuation of off-balance sheet obligations and commitments.
CPE Credits: 20
Prerequisite knowledge:
- Introduction to Financial Accounting or knowledge of financial accounting principles
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Module 1: Comprehend the Investment Environment
- Gain an appreciation of the trade-off between risk and reward
- Understand industry and product life cycles
- Recognize pricing strategies
Module 2: Application of Financial Statement Ratios
- Observe historical trends
- Identify determinants of earnings growth
- Measure financial strength
- Analyze profitability ratios
Module 3: Finding Reality in Reported Earnings
- Identifying non-operating activities that alter reported earnings
- Recognize off-balance sheet liabilities
- Examine areas for accounting manipulation
Module 4: Determinants of Return on Equity
- Examine the Dupont System for determining ROE
- Understand the components of a business
- Observe the link between ROE and implied growth
Module 1: Understanding Financial Reports
- Balance sheet
- Income statement
- Statement of cash flows
Module 2: Recognize Accounting Methods
- Inventory valuation - LIFO vs. FIFO
- Depreciation - Straight Line, Sum of the year's digits, etc.
- Examine capitalization versus expensing
Module 3: Forecast Financial Statements
- Construct common form statements
- Utilize segment data
- Compose one-year and multi-year projections