Chapter 1. Financial Statement Analysis: An Introduction

LEARNING OUTCOMES After completing this chapter, you will be able to do the following: describe the roles of financial reporting and financial statement analysis; describe the roles of the key financial statements (statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows) in evaluating a company’s performance and financial position; describe the importance of financial statement notes and supplementary information—including disclosures of accounting policies, methods, and estimates—and management’s commentary; describe the objective of audits of financial statements, the types of audit reports, and the importance of effective internal controls; identify and describe information sources that analysts use in financial statement analysis besides annual financial statements and supplementary information; describe the steps in the financial statement analysis framework.