Importance of Regulatory Filings, Financial Statement Notes, and Supplementary Information
Regulatory Authorities Publicly traded issuers are required to prepare financial reports in accordance with specific securities laws, regulations, and accounting standards set by regulatory authorities. Since corporate reporting standards and securities regulations can vary across jurisdictions, there is a need…
Roles of Financial Statement Analysis
The primary goal of financial statement analysis is to assess a company’s past, present, and potential future performance and financial condition. This involves using the company’s financial reports, along with other relevant information, to make informed investment, credit, and other…
Financial Statement Analysis Phases
Financial analysis is the process of interpreting and evaluating a company’s performance and position in the context of its economic environment. Analysts use financial analysis to make investment decisions and recommendations. As a generic term, the financial statement analysis framework…
Principles of Revenue Recognition and Accrual Accounting
Companies disclose their revenue recognition policies in the notes to their financial statements. It is useful to review these policies to understand how and when a company recognizes revenue, especially when making comparisons with other companies. General Principles of Revenue…
Assets, Liabilities, and Equity
The balance sheet is also known as the statement of financial position or statement of financial condition. It is a financial statement that gives a snapshot of a company’s assets, and its sources of capital, i.e., liabilities and shareholder’s equity,…
Uses and Limitations of the Balance Sheet
The balance sheet can provide very useful information to users of financial statements. It, however, has several limitations. Uses of the Balance Sheet The balance sheet gives insight into a company’s financial condition at a particular point in time. It…
Calculate and Interpret Liquidity and Solvency Ratios
Ratio analysis can assist with the conduct of time-series and cross-sectional analysis of a company’s financial position. Balance sheet ratios are those ratios that involve balance sheet items only and include (i) liquidity ratios, which measure a company’s ability to…
Direct and Indirect Methods – Cash from Operating Activities
Cash flow from Operating Activities may be reported in either presentation format: the direct method and the indirect method. Both IFRS and US GAAP encourage the use of the direct method but will allow either method to be used. Under…
