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Financial Statement Analysis

This course delves into the art of analyzing financial statements. Students explore the challenges in interpreting balance sheets, addressing concerns around valuation, comparability, and the treatment of goodwill, while also appreciating the underlying reporting standards such as GAAP and IFRS.

Moving to the income statement, the course sheds light on the authenticity of reported figures, underscores the role of cash flow analysis in understanding a company’s financial health.

The course takes a critical view of profit calculation, distinguishing genuine profits from accounting anomalies. It also dissects various revenue and expense recognition practices and scrutinizes the application and limitations of metrics like EBITDA in financial statement analysis.

The latter part of the course is dedicated to forecasting and security analysis. Students will engage in practical exercises involving the projection of financial statements and delve into equity analysis, familiarizing themselves with relevant ratios and valuation techniques. Special attention is given to horizontal and vertical analysis methods, enriching the students’ toolkit for comprehensive financial analysis.

This course offers an insightful understanding of financial statement analysis, proving to be an invaluable asset for both educators and learners.

Features

  • Theory, questions, and solutions in a module
  • Developed by industry professionals, ensuring relevance and practical application
  • Case based learning preparing students for exams and/or professional assignments
  • Adaptive question module, offering instant feedback on thousands of questions to accelerate the learning experience
  • Customized learning journey aligned to your course’s learning objectives

Overview of Contents

Introduction to Financial Reporting

Discusses the purpose of financial reporting, highlighting the need for skepticism due to the flaws and manipulation tactics such as small profits, big baths, and maximizing growth expectations.

The Financial Statements

This part of the course delves into the intricacies of basic financial statements, exploring the balance sheet's nuances, including valuation challenges and the reliability of book value. The income statement section evaluates the authenticity of reported figures, while the study of cash flow statements emphasizes their analytical applications and significance in financial decisions.

Analysing Profitability

Here students are introduced to a detailed analysis of profits, scrutinizing aspects such as the nature of profit, revenue and expense recognition, and the applications and limitations of EBITDA. It also sheds light on the reliability of disclosure and audits, examining how manipulation can be detected.

Forecasting

Guides students through forecasting financial statements, sensitivity analysis, and multi-year projections.

Equity Analysis

Discusses balance sheet ratios, income statement ratios, cash flow statement ratios and covers topics like horizontal and vertical analysis. Discusses various models such as the Dividend Discount Model, Price-Earnings Ratio, and Du Pont Formula, alongside business valuation techniques.
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