Financial Statement Analysis
Financial statements tell a story, if you know how to read them.
About this course
Financial statements tell a story, if you know how to read them. This course shows you how to turn the income statement, balance sheet, cash flow statement and notes into clear judgements about performance, financial strength and risk.
You will practise ratio, trend and cash flow analysis on practical cases, learn to spot aggressive accounting and warning signs, and structure your findings for credit, investment and management decisions. We also look at how to compare figures fairly across periods of high inflation and currency change, including Syria's move to the new pound.
What you'll learn
- Read and interpret the income statement, balance sheet, cash flow statement and notes prepared under IFRS.
- Analyse performance using horizontal, vertical (common-size) and trend analysis.
- Calculate and interpret profitability, liquidity, efficiency, leverage and market ratios.
- Assess the quality of cash flows and the link between profit and cash.
- Identify accounting choices and warning signs that affect the quality of earnings.
- Evaluate a company's creditworthiness and its capacity to service debt.
- Compare financial results fairly across periods of high inflation and currency change.
- Structure and present an analysis that supports credit, investment or management decisions.
Curriculum
- Purpose of financial reporting
- Users and their information needs
- Overview of IFRS
- Structure of the annual report
- Revenue and expense recognition
- Operating and non-operating items
- Earnings per share
- Other comprehensive income
- Assets, liabilities and equity
- Current and non-current classification
- Measurement bases
- Off-balance-sheet items
- Operating, investing and financing activities
- Direct and indirect methods
- Free cash flow
- Reconciling profit and cash
- Common-size statements
- Year-on-year and multi-year trends
- Comparing with peers and benchmarks
- Comparing figures across inflation, devaluation and redenomination
- Profitability ratios
- Liquidity ratios
- Efficiency and working capital ratios
- Leverage and coverage ratios
- Market and valuation ratios
- DuPont analysis
- Cash flow quality
- Cash conversion cycle
- Cash flow ratios
- Cash flow forecasting basics
- Accounting choices and estimates
- Aggressive revenue and expense practices
- Common red flags
- Reading the notes and audit report
- Assessing capacity to repay
- Debt structure and covenants
- Credit scoring approaches
- Writing a credit assessment
- Linking analysis to valuation
- Performance review for managers
- Identifying improvement opportunities
- Presenting findings clearly
- Full analysis of a company
- Building conclusions from evidence
- Presenting and defending recommendations
Who it's for
Accountants, credit and investment analysts, bankers, auditors and managers who rely on financial statements to make decisions.
Before you start
- Basic knowledge of accounting and how financial statements are prepared.
- Working familiarity with Excel.
Prepares for
Part of these Alalamia diplomas
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