Understanding Financial Statement

Overview

This course will cover the fundamental areas of financial accounting and analysis to ensure that the professionals are more than ready to meet the challenges ahead. The attendees will obtain the financial accounting and analysis skills needed to add value to key business decisions in the organization.

Learning Outcome

Recognize important financial accounting topics and how to report them on financial statements and their analysis
Properly account for assets, liabilities, equity, revenues and expenses.
Recognize the need for transparency in reporting of financial statements and management reports.
Determine the structure, presentation and disclosure of financial statements and annual reports.
Report and interpret income statement and balance sheet accounts.

Course Outline

FINANCIAL ACCOUNTING

Financial Statements

Four Key Financial Statements
Relationship among the Financial Statements
Management Uses of Financial Statements
Essential Notes to the Financial Statements

Income Statement

Recognizing and Accounting for Revenues and Expenses
Applying Matching Principle and Accrual Basis
Comprehensive Income and Earning Per Share

Balance Sheet & Statement of Owner’s Equity

Categories and Accounts of Assets, Liabilities and Equity
Definitions of Accounts in the Balance Sheet
Statement of Owners Equity

Cash Flow

Defining the Three Sections of Cash Flow Statement
Direct versus Indirect Method and the Relation to BS and IS
Interpreting Cash flow Patterns

FINANCIAL ANALYSIS

Components of Financial Statement Analysis

Role of Financial Reporting and Analysis
Core Financial Statements and the Importance of the Annual Report
The Important Role of Notes and Supplementary Information
Objective and Types of Audits of Financial Statements
Financial Statement Analysis Framework
The Accounting Cycle
Financial Reporting Mechanics
Relationship, Elements and Classification of Financial Statements

The Financial Statements

Income Statement Components
The Three Important Components of Income Statements
Revenue and Expense Recognition
Balance Sheet Components
- Measurement and Classification
- The Five Important Components of Balance Sheet

Cash Flow Statement:

- Operating, Investing, and Financing Activities
- Direct versus Indirect Methods in Cash Flow Preparation
- Reading and Interpreting Cash Flow
- The Cash Rich Standard

Financial Analysis Techniques

Vertical Analysis and Strategy: Balance Sheet and Income Statement Approaches
Horizontal, Trend Analysis and Growth
Liquidity Analysis: Ratios
Asset Management and Activity Ratios
Solvency Analysis: Debt, Equity, and Times Interest Earned Ratios
Profitability Analysis: Profit Margin, Gross Margin, Return on Assets, Return on Equity
Market and Valuation: Price-Earnings and Earnings-per-Share Ratios
DuPont Analysis: The Three-Step and Five-Step Models
Limitation of Ratio Analysis