### Analyzing Cash Flow Statements

Overview/Description
Target Audience
Expected Duration
Lesson Objectives
Course Number

Overview/Description

Target Audience
Individuals who require knowledge of the basics of accounting, who are starting a business or interested in becoming a partner, who are learning to manage the accounting activities of a business, and who need to review accounting principles and procedures. Shareholders or people who are interested in becoming a shareholder can also benefit from this course.

Expected Duration (hours)
2.0

Lesson Objectives

Tools for Financial Statement Analysis

• recognize the importance of using financial statements as a method of comparison.
• use horizontal analysis to determine if a given company's performance is within industry standards.
• calculate trend percent to reveal patterns in a company's financial information, given a scenario.
• identify the base amount for calculating the common-size percent for a balance sheet and income statement.
• calculate the common-size percent to determine if there is a significant change, given a scenario.
• Liquidity and Efficiency

• recognize the importance of being able to determine a company's liquidity and efficiency.
• calculate the current ratio for a given scenario to determine if the company has enough working capital to meet its short-term obligations.
• perform acid-test ratios to determine if a company faces liquidity problems in a given scenario.
• determine if a company's accounts receivable turnover is favorable, given a scenario.
• determine a company's merchandise inventory turnover, given a scenario.
• Solvency

• recognize the importance of determining a company's solvency.
• calculate the debt and equity ratio to determine if a company is solvent in a given scenario.
• determine a company's credit rating by calculating the ratio of pledged assets to secured liabilities for a given scenario.
• determine which of two companies is a better credit risk by calculating and analyzing their times interest earned ratios, given information from their income statements.
• Profitability

• recognize the importance of being able to determine a company's profitability.
• analyze a company's return on total assets to determine if it is favorable, for a given scenario.
• determine the common stockholder's equity for a given scenario.
• determine the range of the price-earnings ratio per share, given a scenario.
• determine the best investment for a given scenario based on the dividend yield.
• Course Number:
FIN0223