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Financial Statement AnalysisModule 3 of 9

Analyzing Balance Sheets

5

Concepts

4

Formulas

1

Decisions

3

Quiz Questions

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Key Concepts

5 concepts covered in this module.

Intangible Assets

Identifiable (patents, trademarks) can be recognized. Goodwill arises only from acquisitions. Internally generated goodwill NOT recognized.

Goodwill

Purchase price - Fair value of net identifiable assets. Not amortized but tested annually for impairment. Only written DOWN (GAAP); IFRS similar.

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Formulas

4 essential formulas for this module.

Goodwill

Goodwill = Purchase Price - FV of Net Identifiable Assets

Where: Only from business combinations

Current Ratio

Current Ratio = Current Assets / Current Liabilities

Where: >1 indicates short-term solvency

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Decision Frameworks

1 decision frameworks to guide your analysis.

FVPL vs FVOCI vs Amortized Cost?

  • FVPL: trading securities, most volatile income
  • FVOCI: available for sale, unrealized G/L in OCI (not income)
  • Amortized cost: held-to-maturity debt, most stable income

Mind Map

Visual overview of how concepts connect in this module.

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Flashcard

Intangible Assets

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Answer
Identifiable (patents, trademarks) can be recognized. Goodwill arises only from acquisitions. Internally generated goodwill NOT recognized.
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Analyzing Statements of Cash Flows I