Chapter 13 Notes.docx

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Financial Accounting
G.Quan Fun

Users PerspectiveObjectivespredict the amount of expected returnsassess the risks associated with the returndiff users have diff needsdiff needs require diff ratio analysisConcerns of Creditorsshort and long term liquidityConcerns of Investorsprofitabilitydividendsfuture stock pricesFinancial Statement Analysis Two BenchmarksTime Series AnalysisTrend Analysisinformation for a single company is compared over time on a year over year basisMDA management discussionanalysismin 10 years comparisoneg change in sales volume each year for its existing storesComparison with Similar Companiesprovides insights concerning a companys relative performance by comparisons with similar companies within the same industriesgov has SIC standard industry clarifications info that provides useful metrics for comparison purposesRatio and Percentage AnalysisRatio Percentages Analysisanalytical tool designed to identify significant relationships it measures the proportional relationship bw 2 FS amountsusesto allow users to compare results from diff sizes of companies within the same industryrevenue is the base line at 100 on income statementtotal assets is base line at 100 on balance sheet
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