Transcription of Introduction to Financial Statement Analysis
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Introduction to Financial Statement Analysis
Learning Objectives5chapterIntroduction to FinancialStatement Analysis1 Explain 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. By the endof 1992, IBM had an estimated value of $ decline in value can be traced to a strategic errormade by IBM in the early 1980s.
toward identifying problem areas. In sum, financial statement analysis is both diagnosis— identifying where a firm has problems—and prognosis—predicting how a firm will perform in the future. 1 Explain the purpose of financial statement analysis. financial statement analy-sis The examination of both the relationships among fi-nancial ...
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