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Financial Statement AnalysisModule 1 of 9

Introduction to Financial Statement Analysis

6

Concepts

0

Formulas

1

Decisions

3

Quiz Questions

Key Concepts

6 concepts covered in this module.

FSA Framework

1) State purpose/context, 2) Collect data, 3) Process data, 4) Analyze/interpret, 5) Develop conclusions, 6) Follow-up.

Three Main Statements

Income statement (performance), Balance sheet (position), Cash flow statement (cash generation). Plus: Statement of changes in equity.

IFRS vs US GAAP

IFRS: principles-based, used globally in 140+ countries. US GAAP: rules-based, used in US. Convergence ongoing but differences remain.

Auditor's Report

Unqualified (clean), Qualified (except for), Adverse (material misstatements), Disclaimer (insufficient evidence).

Management Discussion & Analysis

MD&A provides management's perspective on financial results, trends, risks, and forward-looking information.

Notes to Financial Statements

Accounting policies, detail behind line items, contingent liabilities, segment reporting. Critical for analysis.

Decision Frameworks

1 decision frameworks to guide your analysis.

IFRS vs US GAAP key differences to watch?

  • Inventory: IFRS prohibits LIFO; US GAAP allows LIFO
  • Development costs: IFRS can capitalize; US GAAP expenses
  • Impairment: IFRS allows reversal for most assets; US GAAP does not

Mind Map

Visual overview of how concepts connect in this module.

Intro to FSA
Framework
Purpose & context
Collect data
Process
Analyze
Conclude
Follow-up
Financial Statements
Income Statement
Balance Sheet
Cash Flow Statement
Changes in Equity
IFRS vs GAAP
Principles vs rules-based
LIFO allowed (GAAP only)
Development costs
Impairment reversal
Audit Opinions
Unqualified (clean)
Qualified
Adverse
Disclaimer
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FSA Framework

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Answer
1) State purpose/context, 2) Collect data, 3) Process data, 4) Analyze/interpret, 5) Develop conclusions, 6) Follow-up.
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Analyzing Income Statements