Financial Accounting

8.

Financial Statement Analysis

8.1.

Overview of Financial Statement Analysis

8.1.1.

Purpose and Objectives

8.1.2.

Users of Financial Analysis

8.1.3.

Sources of Information

8.1.4.

Limitations of Financial Statement Analysis

8.2.

Analytical Techniques

8.2.1.

Horizontal Analysis

8.2.1.1.

Dollar Change Analysis

8.2.1.2.

Percentage Change Analysis

8.2.1.3.

8.2.2.

Vertical Analysis

8.2.2.1.

Common-Size Income Statements

8.2.2.2.

Common-Size Balance Sheets

8.2.2.3.

Industry Comparisons

8.3.

8.3.1.

Categories of Ratios

8.3.2.

Liquidity Ratios

8.3.2.1.

8.3.2.2.

Acid-Test Ratio

8.3.2.3.

8.3.2.4.

Working Capital

8.3.3.

Activity Ratios

8.3.3.1.

Accounts Receivable Turnover

8.3.3.2.

Inventory Turnover

8.3.3.3.

8.3.3.4.

Days Sales Outstanding

8.3.3.5.

Days Sales in Inventory

8.3.4.

Profitability Ratios

8.3.4.1.

Gross Profit Margin

8.3.4.2.

Operating Profit Margin

8.3.4.3.

Net Profit Margin

8.3.4.4.

Return on Assets

8.3.4.5.

Return on Equity

8.3.4.6.

Return on Investment

8.3.5.

Leverage Ratios

8.3.5.1.

Debt-to-Assets Ratio

8.3.5.2.

Debt-to-Equity Ratio

8.3.5.3.

Times Interest Earned

8.3.5.4.

Cash Coverage Ratio

8.3.6.

Market Value Ratios

8.3.6.1.

Price-Earnings Ratio

8.3.6.2.

Market-to-Book Ratio

8.3.6.3.

8.3.6.4.

Dividend Payout Ratio

8.4.

Integrated Financial Analysis

8.4.1.

DuPont Analysis

8.4.2.

Quality of Earnings Analysis

8.4.3.

Cash Flow Analysis

8.4.4.

Comparative Analysis

8.4.5.

8.5.

Limitations and Considerations

8.5.1.

Accounting Method Differences

8.5.2.

Inflation Effects

8.5.3.

Seasonal Variations

8.5.4.

8.5.5.

Industry Differences

8.5.6.

Economic Conditions

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7. Advanced Financial Accounting Topics

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1. Introduction to Financial Accounting