This chapter explain the purpose and identify the building blocks of analysis, describe standards for comparisons in analysis, summarize and report results of analysis, explain and apply methods of horizontal analysis, describe and apply methods of vertical analysis, define and apply ratio analysis. | Analysis of Financial Statements Chapter 17 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 17: Analysis of Financial Statements 17-C1: Purpose of Analysis 2 Application of analytical tools Involves transforming data Reduces uncertainty Basics of Analysis Financial statement analysis helps users make better decisions. Internal Users Managers Officers Internal Auditors External Users Shareholders Lenders Customers C 1 3 Financial statement analysis applies analytical tools to general-purpose financial statements and related data for making business decisions. It involves transforming accounting data into more useful information. Financial statement analysis reduces our reliance on hunches, guesses, and intuition as well as our uncertainty in decision making. It does not lessen the need for expert judgment; instead, it provides us an effective and systematic basis for making business decisions. This section describes the purpose of financial statement analysis, its information sources, the use of comparisons, and some issues in computations. Internal users of accounting information are those involved in strategically managing and operating the company. They include managers, officers, internal auditors, consultants, budget directors, and market researchers. The purpose of financial statement analysis for these users is to provide strategic information to improve company efficiency and effectiveness in providing products and services. External users of accounting information are not directly involved in running the company. They include shareholders, lenders, directors, customers, suppliers, regulators, lawyers, brokers, and the press. External users rely on financial statement analysis to make better and more informed decisions in pursuing their own goals. The common goal of these users is to evaluate company . | Analysis of Financial Statements Chapter 17 PowerPoint Editor: Beth Kane, MBA, CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 17: Analysis of Financial Statements 17-C1: Purpose of Analysis 2 Application of analytical tools Involves transforming data Reduces uncertainty Basics of Analysis Financial statement analysis helps users make better decisions. Internal Users Managers Officers Internal Auditors External Users Shareholders Lenders Customers C 1 3 Financial statement analysis applies analytical tools to general-purpose financial statements and related data for making business decisions. It involves transforming accounting data into more useful information. Financial statement analysis reduces our reliance on hunches, guesses, and intuition as well as our uncertainty in decision making. It does not lessen the need for expert judgment; instead, it provides us
