ACCT 212 Chapter Notes - Chapter Chapter 13: Financial Statement Analysis, Financial Statement, Working Capital
Document Summary
Financial statement analysis: application of analytical tools to financial statements and related data for making business decisions. Internal users of accounting information manage and operate the company. External users are not involved in running the company they just use the financial statement analysis to pursue their goals. The purpose is for internal users to provide information to improve efficiency and effectiveness. The four building blocks of the financial statement analysis cover the financial condition or performance. Financial analysis uses general purpose financial statements which include: Statement of stockholders equity (statement of retained earnings) Financial reporting: communication of financial information useful for making investment, credit, and business decisions. Analyzing financial statements the following standards (benchmarks) for comparison are used: Horizontal analysis: review of financial statement analysis across time. Comparative financial statements: statement with data for two or more successive periods placed in side by side columns often with changes shown in dollar amounts and percentage.
