Preview

Financial Statement Analysis for Investors

Best Essays
Open Document
Open Document
4933 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Financial Statement Analysis for Investors
Financial Statement Analysis for Investors
Michael Price
MBA640: Accounting for Decision Making
Dr. Ulinski
December 11, 2012

Table of Contents:
Section I: Introduction (Page 3)
Section II: Literature Review (Page 4)
Section III: Methodology and Data Collection (Page 5)
Section IV: Results (Page 6)
a. Income Statement Analysis (Page 7)
b. Balance Sheet Analysis (Page 11)
c. Statement of Cash flow Analysis (Page 14)
Section V: Conclusion (Page 16)
a. Recommendation for Future Study (Page 16)
Section VI: Work Cited (Page 18)

Section I:
Introduction
The main purpose of the research paper is to support why financial statements are an important tool when analyzing a company as a potential investor or investment analyst. There is a lot of useful data in financial statements that can help provide insight into future success or failure for a business. Throughout research, there will be substantial support on how important it is for potential investors to use the data found in financial statements and how particular formulas should be used to help aid in investment analysis. Many investors fail to look at some of the most crucial pieces of data when basing their decision or they often fail to apply the data found in financial statements to future results. The research will show how data found in financial statements can be applied to predict how a company may fair going forward. The research was conducted on the balance sheet, income statement and statement of cash flow. Each has crucial information that can help determine the financial condition of a company and can tell in a different way, the suitability of a company for investment purposes.

Thesis
If an investor is planning to invest in a particular company, it is crucial for the investor to use the information found in the financial statements in order to make an educated investment decision. An investor can 't make an informed decision on suitability of an


Cited: 1. Kennon, Joshua. "Income Statement Analysis." About.com Investing for Beginners. N.p., n.d. . 2. Wild, John J., Kermit D. Larson, and Barbara Chiappetta. Fundamental Accounting Principles: 20th Edition. New York: McGraw-Hill/Irwin, 2011. Print. 3. Graham, Benjamin, and Charles McGolrick. The Interpretation of Financial Statements. New York: Harper & Row, 1975. Print. 4. Kennon, Joshua. " Analyzing a Balance Sheet." About.com Investing for Beginners. N.p., n.d. Web. 24 Nov. 2012. . 5. Krantz, Matt. "What Should Investors Focus on in Financial Statements?" USATODAY.COM. USA Today, 12 Jan. 2012. Web. 23 Oct. 2012. . 6. McClure, Ben. "Fundamental Analysis: The Cash Flow Statement." Educating the World about Finance. Investopedia, n.d. Web. 26 Nov. 2012. . 7. Wallick, S. H. "How to Analyze a Company 's Cash Flow Statement." Yahoo!, 20 May 2009. Web. 26 Nov. 2012. . 8. Janssen, Cory, Chad Langager, and Casey Murphy. "Technical Analysis: Moving Averages."Investopedia – Educating the World about Finance. Investopedia, n.d. Web. 8 Dec. 2012.
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    Bsa 500 Week 4 Balance Sheet and Income Statement Commentary
    • 1256 Words
    • 6 Pages

    Bsa 500 Week 4 Balance Sheet and Income Statement Commentary

    Balance Sheets and Income Statements is an approach to review the overall financial status of the company. We will be reviewing four companies in different industries’ balance sheet and income statements. With a technique to combine the statements we will be able to evaluate the companies’ income, expense and stockholder’s equity in the company. In reviewing Swift Transportation Company, Eastman Chemical Company, United Natural Foods, Inc. and Wells Fargo and Company over the course of the last few years we will be able to understand the value and growth potential of these companies.…

    • 1256 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Acc 205 Week 1 Assignment
    • 1709 Words
    • 7 Pages

    Acc 205 Week 1 Assignment

    Walther. (2012). Principles of Accounting: Volume I (1st ed.). San Diego, CA: Bridgepoint Education, Inc. www.ashford.edu…

    • 1709 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Good Essays

    Microsoft Target Vs Verizon
    • 709 Words
    • 3 Pages

    Microsoft Target Vs Verizon

    When one is trying to determine the health of a company and the risk involved either in terms of employment or investment opportunity it is wise to either view or create a Financial Statement Analysis. In evaluating each of the methods, as a team it was recognized that each part is a snippet of the financial structure of each of the companies. By analyzing and then comparing the data from the solvency ratio, liquidity ratio and a probability ratio, the team could make a firm decision in Microsoft regarding the present and future financial…

    • 709 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Business Plan for Wash Dry and Guard Detailing
    • 15669 Words
    • 63 Pages

    Business Plan for Wash Dry and Guard Detailing

    Luehlfing, M. S., & Hillstrom, L. (2008, May 18). Cash flow analysis and statement. Retrieved from Encyclopedia of Business, 2nd ed Web site: http://www.referenceforbusiness.com/management/Bun-Comp/Cash-Flow-Analysis-and-Statement.html…

    • 15669 Words
    • 63 Pages
    Powerful Essays
    Read More
  • Good Essays

    Acc 230 Week 1 Checkpoint
    • 415 Words
    • 2 Pages

    Acc 230 Week 1 Checkpoint

    The financial statement can show the records of the financial activities of a business. It was designed for common people to be able to read and understand this information. Three strengths of the financial statement is it that the owners and managers are able to understand the financial position of the company, this also allows individuals the ability to evaluate the historical and prospective financial performance, and this statement gives a vivid picture of the company’s financial health which will be the base of the owners and managers decision making. This type of foresight is important to the affects of a success in continuing of the company’s operation. Employees also can benefit from this information especially those in a labor union or in bargaining with upper management for a promotions based of the proven thriving performance. For the investors, the strengths of the financial statement give them a clear picture on whether or not to invest more or less in the future.…

    • 415 Words
    • 2 Pages
    Good Essays
    Read More
  • Better Essays

    Evaluating the Financial Health of Wal-Mart Stores, Inc
    • 1737 Words
    • 7 Pages

    Evaluating the Financial Health of Wal-Mart Stores, Inc

    Fraser, L. M., & Ormiston, A. (2007). Understanding financial statements (8th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.…

    • 1737 Words
    • 7 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Week-3 Interpreting Financial Results
    • 531 Words
    • 3 Pages

    Week-3 Interpreting Financial Results

    Parrino, R., Kidwell, D. S, & Bates, T. W. (2012). Fundamentals of corporate finance (2nd ed). Hoboken, NJ: Wiley - Sample financial statements…

    • 531 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Anna
    • 1949 Words
    • 8 Pages

    Anna

    This is an intermediate course which examines the analysis of financial information presented in firms’ financial reports and other related sources. The course comprises three related sections: fundamental analysis; valuation; and, the application of fundamental analysis and valuation techniques to a variety of specific decisions. Fundamental analysis involves answering questions such as: how is the firm performing? how might the firm perform in the future? What risks does the firm face? In addressing these issues particular attention is paid to the impact of financial reporting choices on the relation between reported earnings and firms’ underlying economic performance. Valuation describes the methods by which our expectations of firms’ future performance may be converted to a…

    • 1949 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Fin/200 Cash Flow Preparation
    • 393 Words
    • 2 Pages

    Fin/200 Cash Flow Preparation

    1. Prepare a statement of cash flows for the Widget Corporation. Follow the general procedures indicated in Table 2–10.…

    • 393 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Syllabus
    • 1398 Words
    • 6 Pages

    Syllabus

    Required Texts: Wahlen,Baginski and Bradshaw, Financial Reporting, Financial Statement Analysis and Valuation, 7h Edition, Thomson/Southwestern. 2011.…

    • 1398 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    classified balance sheet
    • 180 Words
    • 4 Pages

    classified balance sheet

    The total asset turnover rate “measures the activity of the assets and the ability of the firm to generate sales through use of the assets” (Gibson, 2013). This total asset turnover rate for Alleg, Inc. is 2.50 while their competitor’s total asset turnover rate is 2.12. Alleg, Inc. has a better rate which proves that their management of their assets is more effective than their competition.…

    • 180 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Accounting Syllabus
    • 3900 Words
    • 16 Pages

    Accounting Syllabus

    Note: Send all queries related to the course material to Weiwei Wang (email: wxw107020@utdallas.edu). She will get back to you within 24 hours. If she does not do so, then send me an email. Weiwei will try to address your questions and, if needed, discuss your questions with me and will get back to you with answers. Course Pre-requisites, Co-requisites, and/or Other Restrictions There are no pre-requisites for this class. Course Description This course provides an introduction to the concepts of financial accounting with an emphasis on the interpretation of financial statements. Specifically it covers how to prepare financial statements (income statement, balance sheet, and statement of cash flows) and how to utilize information contained in financial statements. The course also covers in detail how financial statements report the financial effects of certain important types of transactions that firms commonly undertake. Student Learning Objectives/Outcomes  Summarize the information provided by the balance sheet, income statement and statement of cash flows and interpret individual amounts  Compute financial ratios and use financial ratios and other information to compare companies competing in an industry in terms of profitability and liquidity  Recognize ethical issues in reporting financial results and assess the impact of these issues on shareholders and other external users of the information Text: Introduction to Financial Accounting, 10th ed. (ISBN: 0136122973), C. Horngren, G. Sundem, J. Elliott and D. Philbrick, Prentice Hall. Cases in Financial Reporting, 7th ed, Engel, Hirst and McAnally, Cambridge Business Publishers. (Note:…

    • 3900 Words
    • 16 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Syllabus
    • 1809 Words
    • 8 Pages

    Syllabus

    Schroeder, R. G., Clark, M, W., & Cathey, J. M. (2011). Financial accounting theory and analysis: Text and cases (10th ed.). Hoboken, NJ: Wiley.…

    • 1809 Words
    • 8 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Capital Budgeting
    • 267 Words
    • 2 Pages

    Capital Budgeting

    Jan R. Williams, Susan F. Haka, Mark S. Bettner & Joseph V. Carcello, 14th edition 2008, Financial & Managerial Accounting, The Basis for Business Decisions, McGraw-Hill Irwin…

    • 267 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Best Essays

    Financial Reporting
    • 4348 Words
    • 18 Pages

    Financial Reporting

    Bibliography: Elliott, B & Elliott, J. (2012) Financial accounting and reporting. 15th ed. Harlow: Pearson, Prentice Hall.…

    • 4348 Words
    • 18 Pages
    Best Essays
    Read More

Related Topics