Course : Business Valuation and Analysis

Effective Period : Februari 2018

A Framework for Business Analysis

and Valuation Using Financial
Statement

Session 1
 Acknowledgement

If you are using PowerPoint from textbook,

please use this slide to give information about
the source of the slides.

Example:

These slides have been adapted from:

Krishna G. Palepu, & Paul M. Healy. (2012). Business Analysis

and Valuation: Using Financial Statement. 05. Cengage
Learning. ISBN: 9781111972301.
Chapter 1
Learning Outcome

• LO 1 : Review The framework for financial statement

analysis, how to gather data from financial
statements and strategy analysis
 Chapter 1:
Framework
for Business
Analysis
Using
Financial
Statements

©2013 Cengage Learning.

All Rights Reserved. May
 Key Concepts in Chapter 1

• Financial statements are an important source of

information to the capital markets and business
analysts.

• Analyzing financial statements addresses a number of

issues of interest to external stakeholders and
company insiders.

©2013 Cengage Learning.

All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
 The Role of Financial Reporting in
Capital Markets

• Financial reporting provide much needed information

to capital market participants

– Financial intermediaries depend upon the

information in financial statements to evaluate
investment opportunities.
– Information intermediaries assure the quality of
financial statement representations.
©2013 Cengage Learning.– Relevant and reliable financial information is

essential for the functioning of capital markets.

All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
 How Capital Markets Function

©2013 Cengage Learning. All Rights Reserved.

May not be scanned, copied or duplicated, or
posted to a publically accessible website, in whole
or in part.
.
 From Business Activities to
Financial Statements

• Financial statements measure and summarize the

economic consequences of business activities.

• Accounting systems facilitate information quality.

– The role of accrual basis accounting.
– The need for generally accepted accounting
principles (GAAP).
– Auditing and the quality of financial information.
©2013 Cengage Learning.
All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
 From
Business
Activities
to
Financial
Statement
s

©2013 Cengage Learning. All Rights Reserved.

May not be scanned, copied or duplicated, or
posted to a publically accessible website, in whole
or in part.
 Financial Statements and Business
Analysis

• Business intermediaries use financial statements to

accomplish four key objectives:

– Business strategy analysis

– Accounting analysis
– Financial analysis
– Prospective analysis
©2013 Cengage Learning.
All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
 Business
Strategy
Analysis

©2013 Cengage Learning. All Rights Reserved.

May not be scanned, copied or duplicated, or
posted to a publically accessible website, in whole
or in part.
 Concluding Comments

• Financial statements are source of widely available

data on publicly traded corporations.

• Accrual basis accounting attempts to accurately reflect

expectations of economic performance, but requires
careful analysis.

• This chapter has outlined a useful framework for

business analysis using financial statements.
©2013 Cengage Learning.
All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.