Financial Analysis

2.

Financial Statements Fundamentals

2.1.

Overview of Financial Reporting

2.1.1.

Purpose of Financial Statements

2.1.2.

Primary Financial Statements

2.1.3.

Supplementary Information

2.1.4.

Reporting Periods and Frequency

2.2.

Accounting Frameworks

2.2.1.

Generally Accepted Accounting Principles (GAAP)

2.2.2.

International Financial Reporting Standards (IFRS)

2.2.3.

Key Differences Between GAAP and IFRS

2.2.4.

Regulatory Requirements

2.3.

Interrelationship of Financial Statements

2.3.1.

Flow of Information Between Statements

2.3.2.

Double-Entry Accounting Impact

2.3.3.

Timing Differences and Accruals

2.4.

The Balance Sheet

2.4.1.

Purpose and Structure

2.4.2.

2.4.2.1.

2.4.2.1.1.

Cash and Cash Equivalents

2.4.2.1.2.

Short-Term Investments

2.4.2.1.3.

Accounts Receivable

2.4.2.1.4.

Allowance for Doubtful Accounts

2.4.2.1.5.

2.4.2.1.6.

Prepaid Expenses

2.4.2.1.7.

Other Current Assets

2.4.2.2.

Non-Current Assets

2.4.2.2.1.

Property, Plant, and Equipment

2.4.2.2.2.

Accumulated Depreciation

2.4.2.2.3.

Intangible Assets

2.4.2.2.4.

2.4.2.2.5.

Long-Term Investments

2.4.2.2.6.

Deferred Tax Assets

2.4.3.

2.4.3.1.

Current Liabilities

2.4.3.1.1.

Accounts Payable

2.4.3.1.2.

Short-Term Debt

2.4.3.1.3.

Accrued Liabilities

2.4.3.1.4.

Unearned Revenue

2.4.3.1.5.

Current Portion of Long-Term Debt

2.4.3.2.

Non-Current Liabilities

2.4.3.2.1.

2.4.3.2.2.

2.4.3.2.3.

Lease Liabilities

2.4.3.2.4.

Deferred Tax Liabilities

2.4.3.2.5.

Pension Obligations

2.4.4.

Shareholders' Equity

2.4.4.1.

2.4.4.2.

Additional Paid-In Capital

2.4.4.3.

Retained Earnings

2.4.4.4.

2.4.4.5.

Accumulated Other Comprehensive Income

2.4.4.6.

Non-Controlling Interests

2.5.

The Income Statement

2.5.1.

Purpose and Structure

2.5.2.

Revenue Recognition

2.5.2.1.

Revenue Recognition Principles

2.5.2.2.

Multiple Performance Obligations

2.5.2.3.

Contract Assets and Liabilities

2.5.3.

Cost of Goods Sold

2.5.3.1.

Direct Materials and Labor

2.5.3.2.

Manufacturing Overhead

2.5.3.3.

Inventory Costing Methods

2.5.4.

Gross Profit Analysis

2.5.5.

Operating Expenses

2.5.5.1.

Selling Expenses

2.5.5.2.

General and Administrative Expenses

2.5.5.3.

Research and Development

2.5.5.4.

Depreciation and Amortization

2.5.6.

Operating Income

2.5.7.

Non-Operating Items

2.5.7.1.

Interest Income and Expense

2.5.7.2.

Investment Gains and Losses

2.5.7.3.

Foreign Exchange Gains and Losses

2.5.7.4.

Other Income and Expenses

2.5.8.

2.5.9.

Income Tax Expense

2.5.9.1.

Current Tax Provision

2.5.9.2.

Deferred Tax Provision

2.5.10.

2.5.11.

Earnings Per Share

2.5.11.1.

Basic Earnings Per Share

2.5.11.2.

Diluted Earnings Per Share

2.5.11.3.

Weighted Average Shares Outstanding

2.6.

The Cash Flow Statement

2.6.1.

Purpose and Importance

2.6.2.

Operating Activities

2.6.2.1.

2.6.2.2.

Indirect Method

2.6.2.3.

Non-Cash Adjustments

2.6.2.4.

Working Capital Changes

2.6.3.

Investing Activities

2.6.3.1.

Capital Expenditures

2.6.3.2.

Asset Disposals

2.6.3.3.

Investment Purchases and Sales

2.6.3.4.

Business Acquisitions and Disposals

2.6.4.

Financing Activities

2.6.4.1.

Debt Issuance and Repayment

2.6.4.2.

Equity Issuance and Repurchase

2.6.4.3.

Dividend Payments

2.6.4.4.

2.6.5.

Net Change in Cash

2.6.6.

Free Cash Flow Concepts

2.6.6.1.

Free Cash Flow to Firm

2.6.6.2.

Free Cash Flow to Equity

2.6.6.3.

Unlevered Free Cash Flow

2.7.

Statement of Changes in Equity

2.7.1.

Components of Equity Changes

2.7.2.

Share Transactions

2.7.3.

Comprehensive Income Items

2.7.4.

Dividend Distributions

2.7.5.

Prior Period Adjustments

2.8.

Notes to Financial Statements

2.8.1.

Accounting Policies Summary

2.8.2.

Significant Estimates and Judgments

2.8.3.

Detailed Account Explanations

2.8.4.

Commitments and Contingencies

2.8.5.

Related Party Transactions

2.8.6.

Subsequent Events

2.8.7.

Segment Reporting

2.9.

Management Discussion and Analysis

2.9.1.

Business Overview

2.9.2.

Financial Results Discussion

2.9.3.

Liquidity and Capital Resources

2.9.4.

Market Risk Disclosures

2.9.5.

Critical Accounting Estimates

2.9.6.

Forward-Looking Information

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3. Financial Ratio Analysis