Overview of Financial Statement Analysis CHAPTER
1 CHAPTER Overview of Financial Statement Analysis
Business Analysis Evaluate Prospects Evaluate risks Business decision Makers Equity investors Creditors Managers Merger and Acquisition Analysts External Auditors Directors Regulators Employees Unions Lawyers
Business Analysis Evaluate Prospects Evaluate Risks Business Decision Makers • Equity investors • Creditors • Managers • Merger and Acquisition Analysts • External Auditors • Directors • Regulators • Employees & Unions • Lawyers
Information Sources for Business Analysis Quantitative Qualitative Financial Management Statements Discussion Analysis Industry Statistics Chairperson's Letter Economic Vision/Mission Indicators Statement Regulatory filings Financial press Trade reports Press Releases Web sites
Information Sources for Business Analysis Quantitative • Financial Statements • Industry Statistics • Economic Indicators • Regulatory filings • Trade reports Qualitative • Management Discussion & Analysis • Chairperson’s Letter • Vision/Mission Statement • Financial Press • Press Releases • Web sites
Credit Analysis Equity Analysis Management Control Labor Negotiations Types of Business Regulation Analysis Director Oversight Financial External Auditing Management Mergers, Acquisitions Divestitures
Types of Business Analysis Credit Analysis Equity Analysis Management & Control Mergers, Acquisitions & Divestitures Director Oversight Regulation External Auditing Labor Negotiations Financial Management
Credit Analysis Creditors Trade Creditors Non-trade Creditors Provide goods or Provide major services financing Most short -term Most long-term Usually implicit interest Usually explicit interest Bear risk of default Bear risk of default
Credit Analysis Trade Creditors • Provide goods or services • Most short-term • Usually implicit interest • Bear risk of default Non-trade Creditors • Provide major financing • Most long-term • Usually explicit interest • Bear risk of default Creditors