Introduction to Financial Statement Analysis

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Learning Objectives5chapterIntroduction to FinancialStatement Analysis1Explain the purposeof Financial the rela-tionships between finan -cial Statement numbersand use ratios in analyz-ing and describing a com-pany s common-size fi- nancial statements to per-form comparison offinancial statements acrossyears and between theDuPont framework andhow return on equity canbe decomposed into itsprofitability, efficiency,and leverage cash flow infor-mation to evaluate cashflow the limita-tions of Financial studying this chapter, youshould be able to: 2003 Getty 11/13/03 7:39 PM Page 202In 1987, IBMwas the most valuable company in theworld, worth an estimated $ billion.

Introduction to Financial Statement Analysis 1 Explain the purpose of financial statement analysis. 2 Understand the rela-tionships between finan-cial statement numbers and use ratios in analyz-ing and describing a com-pany’s performance. 3 Use common-size fi-nancial statements to per-

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