Description
Learn how to analyze financial statements with effective methods.
Many readers of annual financial statements do not always fully understand the types of analyses that could be performed to drill down into a companys financial condition and results of its operation while reading a companys annual financial statements. This topic will help readers of annual financial statements to better review, analyze andor understand the annual financial statements of a company that have been provided to them. The material will explain five specific methods of analyzing financial statements that will immediately improve your ability to review and analyze annual financial statements presented to you.
Date: 2020-07-09 Start Time: 1:00 PM ET End Time: 2:40 PM ET
Learning Objectives
* You will be able to review five methods of analyzing financial statements.
* You will be able to describe how analysts perform horizontal and vertical trend analyses.
* You will be able to discuss data mining.
* You will be able to explain the basic steps that forensic accountants use to analyze financial statements.
Introduction
• Brief Introduction of Financial Statements
• Who Issues Financial Statements and Why
• Why Are Financial Statements Analyzed
• Five Methods of Analyzing Financial Statements
Horizontal and Vertical Trend Analyses
• Vertical Trend Analysis
• Horizontal Trend Analysis
Financial Ratio Analysis
• Assesses and/or Measures the Relationships Among Different Financial Statement Items and Between These Items and Non-Financial Information Performing This Analysis Can Assist in:
• Highlighting Relationships Between Financial Statement Items
• Highlighting Unexpected Changes in Single and/or Multiple Items
• Providing Useful Information to Compare One Entity to Others Within Its Industry to Assist in Evaluating Performance
• These Ratios Can Then Be Compared on a Historical Basis Within the Entity or Against an Industry Benchmark
• Risk Management Association Compiles Comparative Historical Data on a Number of Industries (Annual Statement Studies)
• Integra Information© Provides Business Valuation and Analysis Data on a Number of Industries
• Examples of Types of, and Specific, Ratios Include:
• Liquidity, Profitability and Leverage Ratios
Analysis of Individual Statements/Analysis of the Statement of Cash Flows
• When Does a Company Have Enough Cash?
• When It Has Enough Cash to Pay Short-Term Liabilities
• When Does a Company Have Too Much Cash?
• When the Company Has High Cash Balances on Its Balance Sheet (High Liquidity Ratios)
Data Mining Consists of Queries or Searches Performed Within Accounts (or Other Data) to Identify Anomalies Within the Accounts/Data – Examples of Data Mining Analysis Include:
• Listing a Group of Accounts by Size
• Identifying and Reviewing All New Suppliers
• Identifying Gaps in Check Numbers
• Identifying Duplicate Invoice Numbers or Payments
• Testing Transactions for Proper Cut-Off Dates
• Comparing Recent Prices With Actual Inventory Costs
Detailed Forensic Accounting (Under Development)
AIPB ,CPE ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.
Michael D. Pakter, CPA, CFE, CA-Gould & Pakter Associates, LLC
