How to Read and Interpret Financial Statements, Second Edition
Author: Michael P. GriffinC.M.A.
Testing Format: multiple choice
Your Price: $159.00
ISBN: 9780761215592
Format: Paper or Softback
Overview
Make Sense of Financial Statements
The ability to understand financial statements is an essential skill for success today. This comprehensive course teaches students how to read and analyze the reports that are fundamental to gauging the health of any business. It explains how to interpret balance sheets, income statements, and statements of cash flows— and consider the numbers in the context of external economic conditions.
Students will learn to:
• Grasp the basic concepts and principles of financial accounting and reporting
• View key financial statements—the balance sheet, the income statement, and the statement of cash flows—from the perspective of senior management
• Uncover essential data by applying the right type of analysis—ratio, vertical, or horizontal—to the right statement
• Understand recent changes in legislation, rules, and standards of practice that affect accounting and finance
• Follow the provisions of the Sarbanes-Oxley Act and track its impact on the auditing process and the financial statement value chain
• Review industry statistics, competitive considerations, and other nonfinancial information to achieve a deeper understanding of a company’s financial statements
Now completely revised and updated, the second edition of How to Read and Interpret Financial Statements includes a section on the Statement of Comprehensive Income, expanded coverage of off-balance-sheet financing, a glossary of important terms, and updated information on the difference between marketable securities and investments and the impact of changes in fair value on a company’s financial statements. In each chapter, exhibits, examples, and exercises reinforce lessons and give readers the chance to apply new concepts and practice new skills.
Who Will Benefit
The ability to read and interpret financial statements is a critical skill for any manager.
Table of Contents
About This Course
How to Take This Course
Pre-Test
1 Understanding Financial Statements 1
Introduction
Accounting Is More an Art Than a Science
Basic Concepts and Principles of Financial Accounting and Financial
Statements
Generally Accepted Accounting Principles (GAAP)
Limitations of Financial Statements
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
2 Types of Financial Statements 19
Introduction
Elements of Financial Statements
The Balance Sheet
Income Statement
Statement of Retained Earnings
Statement of Cash Flows
Notes to the Financial Statements and Supplemental Information
Management’s Discussion and Analysis of Financial Condition and
Results of Operation
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
3 The Balance Sheet: Assets 41
Introduction
Current Assets
Long-Term Investments
Property, Plant, and Equipment
Other Assets
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
4 The Balance Sheet: Liabilities and Owner’s Equity 57
Introduction
Liabilities
Off-Balance-Sheet Financing
Owners’ (or Shareholders’) Equity
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
5 The Income Statement 71
Introduction
Income Statement Format
Cash Versus Accrual Basis of Accounting
Apportionment of Revenues and Expenses
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
6 The Statement of Cash Flows 83
Introduction
The Usefulness of the Statement of Cash Flows
The Nature of the Statement of Cash Flows
Statement of Cash Flows: Format Alternatives
Free Cash Flow
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
7 Balance Sheet Analysis 93
Introduction
Ratios in Financial-Statement Analysis
Categories of Financial Ratios
Vertical and Horizontal Analysis
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
8 Income Statement Analysis 111
Sales
Cost of Goods Sold
Operating Income
Profitability Ratios
Horizontal and Vertical Analysis
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
9 Analysis of Operational Results 123
Introduction
Cost Behavior
Cost-Volume-Profit Analysis
The Graphic Presentation of Break-Even
Using Break-Even Analysis
Contribution Margin
The Profit-Volume Graph
Recap
Review Questions
Answers to “Think About It…” Questions from This Chapter
Bibliography 137
Glossary 139
Online Resources 147
Post-Test 149
Index 155