are two of the four key qualitative characteristics of financial accounting information. The others being understandability and comparability. Relevance requires that the financial accounting information should be such that the users need it and it is expected to affect their decisions. Reliability requires that the information should be accurate and true and fair. Relevance and reliability are both critical for the quality of the financial information‚ but both are related such that an emphasis
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Analysis of Financial Statements Ratio Analysis DuPont Equation Potential Misuse of ROE Use Financial Ratios to performance Uses and Limitations of Financial Ratios • Ratios help us to evaluate financial statements. Ratios are used to make comparisons. • There are many different ratios‚ with different ones used to examine different aspects of the firm’s operations. • Ratios can be divided into 5 categories: 1. 2. 3. 4. 5. Liquidity ratios‚ Asset management ratios‚ Debt management ratios‚ Profitability
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Financial Statement Analyses (Intro) The financial statement is a company’s document reporting the outcome of the business. Managers‚ investors‚ and the public can look to the company’s financial statements to assess a company’s current position‚ past performance‚ and predictions of future performance (Horngren‚ Sundem‚ Stratton‚ Burgstahler‚ & Schatzberg‚ 2008). The individual financial statement assists investors in coming to a conclusion concerning the company. It is imperative
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company’s accounting statements or financial statements and making comparisons with relevant information Financial Ratios are measures of relative values of key financial information. Ratio Analysis involves methods of calculating and interpreting financial ratios to assess the firm’s performance. Ratios are measured as (1) percentages; (2) times or multiples; and (3) number of days. Ratios are of interest as key indicators of financial health to: shareholders
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Analysis of Financial Statements Financial statements are frequently a key source of information for financial decisions and taking a look at Microsoft’s financial statements can help us decide certain things about the company. There are three different types of statements that will be discussed in this section. These include: the balance sheet‚ the income statement‚ and the statement of cash flows. They are discussed here in either the sense of quarterly or yearly statements and will be noted
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CHAPTER-I FINANCIAL STATEMENTS LEARNING OBJECTIVES After studying this chapter‚ you will be able to: • Explain the meaning of financial statements of a company; • Describe the form and content of balance sheet of a company; • Prepare the Balance Sheet of a company as per Schedule VI Part I of the Companies Act 1956. • Know the major headings under which the various assets and liabilities can be shown. • Explain the meaning‚ objectives and limitations of analysis using accounting
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CHAPTER 9 ANALYSIS OF FOREIGN FINANCIAL STATEMENTS Chapter Outline I. Reasons to analyze financial statements of foreign companies include: • making foreign portfolio investment decisions‚ • making foreign merger and acquisition decisions‚ • making credit decisions about foreign customers‚ • evaluating foreign suppliers‚ and • benchmarking against foreign competitors. II. There are several problems an analyst might encounter in analyzing foreign financial statements‚ including:
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Financial Statements Financial statements are records of relative financial information of organizations that are highly valuable to both internal and external users of that organization. The following four basic financial statements constitute the foundation of accounting: * Balance sheet * Income statement * Retained earnings statement * Statement of cash flows Purpose of the Financial Statements The balance sheet shows a clear picture of the organization’s financial
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Financial Statement Companies use several tools such as a balance sheet to make sound business decisions. A balance sheet is a quantitative summary of a company ’s financial condition at a specific point in time‚ including assets‚ liabilities and net worth. The first part of a balance sheet shows all the productive assets a company owns‚ and the second part shows all the financing methods (such as liabilities and shareholders ’ equity) Also‚ called statement of condition.
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Financial Statement Analysis Company: Ford Motor Company Introduction: Ford Motor Company is majorly in the manufacturing business of automotive products and services business. Ford is also into the business of financing. The automotive and financial services are the two main segments of Ford. Their automotive operation includes Forth South America‚ Ford North America‚ Ford Asia Pacific Africa‚ Volvo and Ford Europe. The Ford Financial Services includes Ford Motor Credit Company. 1
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