Introduction to Financial Statement Analysis

What financial statement analysis is for, the six-phase framework analysts follow, the regulators and filings that produce company information, how to use the notes, segment data, management commentary and the audit report, why IFRS and US GAAP differences and changing standards matter, and which other sources analysts rely on.

1. 1. The role of financial statement analysisFinancial statement analysis combines a company's reports with other information to judge its past and present performance and position, so the analyst can form expectations about the future and make investment, credit and other economic decisions.Free11 min
2. 2. The financial statement analysis frameworkGood analysis follows six phases: define the purpose and context, collect data, process it, analyse and interpret the results, communicate conclusions, and follow up as new information arrives.14 min
3. 3. Regulators, securities laws and regulatory filingsRegulators require listed companies to report under recognised accounting standards and to file standard documents, and knowing which filing holds which information is a core analyst skill.14 min
4. 4. Notes, segment reporting and management commentaryThe notes explain how the numbers were produced and break them down, segment data shows where the money is made, and management commentary gives management's view of results and outlook, mostly unaudited.14 min
5. 5. Audit reports and internal controlAn independent audit gives reasonable, not absolute, assurance that the statements are fairly presented, and the type of opinion tells the analyst how much to trust them.12 min
6. 6. Reporting systems, changing standards and other information sourcesIFRS and US GAAP still differ in ways that affect comparisons, standards keep changing, and the best analysts combine company filings with issuer, third-party and their own primary research.14 min