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Financial
Statement
Analysis
K.R. Subramanyam
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
INTRODUCTION TO
ACCOUNTING ANALYSIS
o Accounting analysis is the process of evaluating the extent to
which a company’s accounting numbers reflect economic
reality
o Accounting analysis involves a number of different tasks, such
as:
1- evaluating a company’s accounting risk and,
2- evaluating a company’s earnings quality
3- estimating earning power.
o Accounting analysis is the process an analyst uses to identify
and assess accounting distortions in a company’s financial
statements.
See Page 106
Accounting Analysis