Analysis of Financial Statements – Business Valuation
The main goal of Module 6 is to show how the accounting information (combined with other sources of information) can be used for the evaluation of the financial performance and condition of a company.
The basic analytical tools for this purpose are emphasized:
- Horizontal analysis
- Vertical analysis
- Ratio analysis
The application of each tool is illustrated using the financial statements of two companies for the years 2009 and 2008.
Furthermore, Module 6 shows how to prepare the Statement of Cash Flows using the direct and indirect methods.
When completing this module the user will be able to:
- Apply the horizontal and vertical analyses and explain the results.
- Compute the most important financial ratios in order to measure the liquidity, the profitability, the solvency of a company.
- Use the ratios in order to make the necessary investment decisions.
- Understand the importance of the Statement of Cash Flows.
- Prepare Statement of Cash Flows using the direct and indirect method.
