RSM219H1 Chapter Notes - Chapter 12: Financial Statement Analysis, Canadian Tire, Financial Statement
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RSM219H1 Full Course Notes
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Financial statement analysis: process of evaluating a company"s performance based on calculating ratios, looking at relationships within the financial statements, comparing results with historical or industry benchmarks. Analysts use this to help them evaluate corporate performance & risks related to investment. Decisions supported by industry analysis, site visits, interviews with management. Determine the purpose and context of the analysis. Annual financial statements & management"s discussion and analysis (md&a) Prepare common-size analysis and calculate ratios or other metrics. Analyze and interpret the metrics from step 3. Investment analyst/stockbroker to make a recommendation to clients to buy/sell/continue to hold shares. Commercial lender to assess the creditworthiness of a loan applicant / analyse the financial statements of an existing borrower. Company"s credit department analyzing financial statements of customers seeking credit terms. Company analyzing statements of other companies that may be potential acquisition targets.
