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How to Read and Interpret Financial Statements, Second Edition

 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