TRAINING SESSION

FINANCIAL REPORTING ANALYSIS

_Into the World of Finance_ FIAT

 01 INTRODUCTION TO FINANCIAL
STATEMENT ANALYSIS

02 UNDERSTANDING PRIMARY
FINANCIAL STATEMENTS

03 FINANCIAL ANALYSIS
TECHNIQUE

TABLE OF CONTENT
 INTRODUCTION
TO FINANCIAL
STATEMENT
ANALYSIS

01
“Don’t make important financial decisions based on stress ROLES OF FINANCIAL REPORTING AND
or emotion. Stay calm and think things through” FINANCIAL STATEMENT ANALYSIS
- Dave Ramsey - • The role of financial statements issued by companies is to
provide information about a company’s performance, financial
position, and changes in financial position that is useful to a
wide range of users in making economic decisions.
• The role of financial statement analysis is to use financial
reports prepared by companies, combined with other
information, to evaluate the past, current, and potential
performance and financial position of a company for the
purpose of making investment, credit, and other economic
decisions. Managers within a company perform financial
analysis to make operating, investing, and financing decisions
but do not necessarily rely on analysis of related financial
statements. They have access to additional financial
INTRODUCTION TO FINANCIAL
information that can be reported in whatever format is most
STATEMENT ANALYSIS useful to their decision.
-CFA level 1 curriculum, stsudy session 7, reading 21
 PRIMARY FINANCIAL STATEMENTS AND OTHER
INFORMATION SOURCES

Financial Statements and Supplementary Information AUDIT OPINION

• Balance Sheet (Statement of Financial Position)
• Statement of Comprehensive Income
• Statement of Changes in Equity
• Cash Flow Statement
• Financial Notes and Supplementary Schedules
• Management Commentary or Management’s Discussion and
Analysis
• Auditor’s Reports
Other Sources of Information

INTRODUCTION TO FINANCIAL STATEMENT ANALYSIS

 Financial Statement Analysis Framework

INTRODUCTION TO FINANCIAL
STATEMENT ANALYSIS -CFA level 1 curriculum, stsudy session 7, reading 21
UNDERSTANDING PRIMARY
FINANCIAL STATEMENTS

02
UNDERSTANDING PRIMARY
FINANCIAL STATEMENTS

02
INCOME STATEMENT

01
BALANCE
03
CASHFLOW
SHEET STATEMENT
 THE BALANCESHEET
FORMULA:
ASSETS = LIABILITIES + EQUITY

BALANCE SHEET Capital

Structure
Working
Capital
Asset
Peformance
ANALYSIS
 Vertical analysis refers to the method of financial analysis
where each line item is listed as a percentage of a base figure
within the statement. This means line items on income
statements are stated in percentages of gross sales, instead of
in exact amounts of money, such as dollars.
Horizontal analysis reviews and compares changes in the
dollar amounts in a company’s financial statements over
multiple reporting periods. It’s frequently used in absolute
comparisons, but can be used as percentages.
INCOME STATEMENT
Comparision with the industry???
ANALYSIS
CASHFLOW STATEMENT ANALYSIS

• A company's cash flows can be revealed by the

figures that appear on its statement of cash

flows, which shows how a company spends its

money (cash outflows) and from where a

company receives its money (cash inflows).

• The cash flow statement includes all cash inflows

a company receives from its ongoing operations

and external investment sources, as well as all

cash outflows that pay for business activities and

investments during a given quarter. These

include cash flows from operating activities

(CFO), but also cash flows from financing (CFO)

and investing (CFI) activities.

03.
FINANCIAL
ANALYSIS
TECHNIQUE
FINANCIAL ANALYSIS TECHNIQUE