Understanding Financial Statement


This course will cover the fundamental areas of financial accounting and analysis to ensure that the professionals are more than ready to meet the challenges ahead. The attendees will obtain the financial accounting and analysis skills needed to add value to key business decisions in the organization.

Learning Outcome

  • Recognize important financial accounting topics and how to report them on financial statements and their analysis
  • Properly account for assets, liabilities, equity, revenues and expenses.
  • Recognize the need for transparency in reporting of financial statements and management reports.
  • Determine the structure, presentation and disclosure of financial statements and annual reports.
  • Report and interpret income statement and balance sheet accounts.

Course Outline


Financial Statements

  • Four Key Financial Statements
  • Relationship among the Financial Statements
  • Management Uses of Financial Statements
  • Essential Notes to the Financial Statements

Income Statement

  • Recognizing and Accounting for Revenues and Expenses
  • Applying Matching Principle and Accrual Basis
  • Comprehensive Income and Earning Per Share

Balance Sheet & Statement of Owner’s Equity

  • Categories and Accounts of Assets, Liabilities and Equity
  • Definitions of Accounts in the Balance Sheet
  • Statement of Owners Equity

Cash Flow

  • Defining the Three Sections of Cash Flow Statement
  • Direct versus Indirect Method and the Relation to BS and IS
  • Interpreting Cash flow Patterns


Components of Financial Statement Analysis

  • Role of Financial Reporting and Analysis
  • Core Financial Statements and the Importance of the Annual Report
  • The Important Role of Notes and Supplementary Information
  • Objective and Types of Audits of Financial Statements
  • Financial Statement Analysis Framework
  • The Accounting Cycle
  • Financial Reporting Mechanics
  • Relationship, Elements and Classification of Financial Statements

The Financial Statements

  • Income Statement Components
  • The Three Important Components of Income Statements
  • Revenue and Expense Recognition
  • Balance Sheet Components
    • Measurement and Classification
    • The Five Important Components of Balance Sheet

Cash Flow Statement:

    • Operating, Investing, and Financing Activities
    • Direct versus Indirect Methods in Cash Flow Preparation
    • Reading and Interpreting Cash Flow
    • The Cash Rich Standard

Financial Analysis Techniques

  • Vertical Analysis and Strategy: Balance Sheet and Income Statement Approaches
  • Horizontal, Trend Analysis and Growth
  • Liquidity Analysis: Ratios
  • Asset Management and Activity Ratios
  • Solvency Analysis: Debt, Equity, and Times Interest Earned Ratios
  • Profitability Analysis: Profit Margin, Gross Margin, Return on Assets, Return on Equity
  • Market and Valuation: Price-Earnings and Earnings-per-Share Ratios
  • DuPont Analysis: The Three-Step and Five-Step Models
  • Limitation of Ratio Analysis

Applications and Presentations

  • Evaluating a Company’s Past Performance
  • Comprehensive Real-Life Analysis of Publicly Traded Companies

How to read and Understand Financial Statements: Why Financial Statements are Prepared? Stakeholders of Financial Statements