Chapter 13 - Financial statement analysis. Expressing financial statement information in the form of ratios enhances its usefulness. Ratios permit comparisons over time and among companies, highlighting similarities, differences, and trends. This chapter addresses the importance of proficiency with common financial statement analysis techniques that benefit both internal and external users. | Chapter Thirteen Financial Statement Analysis McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Expressing financial statement information in the form of ratios enhances its usefulness. Ratios permit comparisons over time and among companies, highlighting similarities, differences, and trends. This chapter addresses the importance of proficiency with common financial statement analysis techniques that benefit both internal and external users. Factors in Communicating Useful Information Users Types of Decisions Information Analysis The primary objective of accounting is to provide information useful for decision making. To provide information that supports this objective, accountants must consider the following: 13- The primary objective of accounting is to provide information useful for decision making. To provide information that supports this objective, accountants must consider the following: The users The types of decisions and Information analysis. Methods of Analysis Horizontal Analysis Vertical Analysis Ratio Analysis 13- This chapter discusses three categories of analysis methods: horizontal, vertical and ratio. Horizontal Analysis Horizontal analysis (or trend analysis) refers to studying the behavior of individual financial statement items over several accounting periods. Absolute Amounts Percentage Analysis 13- Part I Horizontal analysis (also known as trend analysis) involves analyzing financial data over several accounting periods. Part II The absolute amounts of particular financial statement items have many uses. For example, financial statement users may use absolute amounts reported for research and development costs to judge whether a company is spending excessively or conservatively. However, it is difficult to judge the materiality of an absolute financial statement amount without considering the size of the company reporting it. Part III Percentage analysis . | Chapter Thirteen Financial Statement Analysis McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Expressing financial statement information in the form of ratios enhances its usefulness. Ratios permit comparisons over time and among companies, highlighting similarities, differences, and trends. This chapter addresses the importance of proficiency with common financial statement analysis techniques that benefit both internal and external users. Factors in Communicating Useful Information Users Types of Decisions Information Analysis The primary objective of accounting is to provide information useful for decision making. To provide information that supports this objective, accountants must consider the following: 13- The primary objective of accounting is to provide information useful for decision making. To provide information that supports this objective, accountants must consider the following: The users The types
