Corporate Financial Statement Analysis (2019)

1h 29mIntermediate2023-11-06

Authors

Jim Stice

Professor of Accounting at BYU

Kay Stice

Professor of Accounting at the BYU Marriott School of Management

Course details

Financial reports contain a trove of information about your company's past, present, and future. With the basic tenants of financial analysis in your tool kit, you can use these reports to gain valuable insights into your organization's strengths and shortcomings. In this course, Jim and Kay Stice dive into the subject of financial statements, explaining how to work with and analyze them. They start off with some general knowledge about the structure and layout of a financial statement, and then go deeper by looking at the various ratios most commonly found in these statements. Plus, they detail the various limitations of financial statement analysis. By the end of this course, you'll be able to analyze financial statements to spot concerning trends and make smarter calls going forward.

Learning objectives
Describe the processes by which business activities become entries on an income statement.
Differentiate the components of the DuPont framework.
Explain how common size financial statements are used in corporate financial statement analysis.
Recall the method for calculating accounts receivable turnover.
Explore the use of ratios in corporate financial statement analysis.
Identify appropriate factors when performing corporate financial statement analysis.

Skills covered

Personal FinanceAccounting SkillsCorporate FinanceFinance and AccountingProfessional DevelopmentDeep Dive (X:Y)

Concepts

0. Introduction

01 - What is financial statement analysis
02 - Common methods of analysis

1. A Review of the Financial Statements

03 - The accounting equation
04 - Reading the balance sheet
05 - Reading the income statement
06 - Evaluating the statement of cash flows

2. The DuPont Framework

07 - Determining return on equity
08 - Applying the DuPont framework
09 - Example - Ford vs. General Motors

3. Common-Size Financial Statements

10 - Common-size overview
11 - Common-size income statement
12 - Common-size balance sheet
13 - Example - Walmart vs. Target

4. Profitability Ratios

14 - The many ways to define income and profit
15 - Example - Nordstrom vs. Microsoft

5. Efficiency Ratios

16 - The operating cycle
17 - Days' sales of inventory (DSI)
18 - Average collection period
19 - Examples - Harley and McDonald's

6. Leverage Ratios

20 - Current ratio in theory and practice
21 - The many debt ratios
22 - Example - Comparing tech company debt ratios

7. Limitations of Financial Statement Analysis

23 - Limits to using past performance
24 - Pitfalls of financial statement analysis
25 - Avoid the temptation of a single reason

Conclusion

26 - What's next