Accounting Analysis Process to evaluate and adjust financial statements to better reflect economic reality Comparability problems -across firms and across time Manager estimation error Accounting Distortion problems( Earnings management Risk Distortion of business
Accounting Analysis Comparability problems — across firms and across time Manager estimation error Distortion problems Earnings management Distortion of business Accounting Risk Process to evaluate and adjust financial statements to better reflect economic reality
Financial Analysis Process to evaluate financial position and performance using financial statements Profitability analysis--Evaluate return on investments Common tools Risk analysis Evaluate riskiness creditworthiness( Ratio Cash analysis flow Sources and uses -Evaluate source analysis of funds analysis deployment of funds
Financial Analysis Profitability analysis—Evaluate return on investments Risk analysis ——— Evaluate riskiness & creditworthiness Sources and uses —Evaluate source & of funds analysis deployment of funds Common tools Ratio analysis Cash flow analysis Process to evaluate financial position and performance using financial statements
Prospective Analysis Process to forecast future payoffs Business Environment strategy Analysis Accounting Analysis Financial Analysis Intrinsic value
Prospective Analysis Intrinsic Value Business Environment & Strategy Analysis Accounting Analysis Financial Analysis Process to forecast future payoffs
Dynamics of Business Activities Business Activities Time Beginning of period Investing planning Financing Operating Planning Investing Financing End of period
Dynamics of Business Activities Investing Operating Financing End of period Beginning of period Business Activities Time Planning Planning Investing Financing