BUS 251 Chapter Notes - Chapter 12: Financial Statement, Trend Analysis, Credit Risk

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Susan Bubra

Document Summary

Financial statement analysis process of evaluating the company"s performance based on the financial statement s. The analysis includes rations, looking at relationships between financial statement and comparing results with historical or industry benchmarks. Provide info about company"s financial helath, cash flows and operating efficiencies. Analyst the person doing the analysis can be shareholder, potential investors, creditors, security analysts and credit rating agencies. They do this evaluate the corporate performance and the risk related to investment or lending decisions involving the company. 5 step process for analyzing f/s: determine the purpose and context of the analysis. Focus on obtaining the necessary data include the company"s annual report which includes f/s and management discussion ad analysis and also industry data may be gathered. Analyst must move beyond the four f/s and use info from the notes: prepare common-size analysis and calculate ratios or other metrics. The analyst will prepare common-size f/s and calculate ratios and other metrics identified in step 1.