Week 5: Financial Analysis
This week we will explore Chapter(s) 16 and 17 of the textbook. Chapter 16 introduces the statement of cash flows and reviews its purposes, uses, information presented, and how to prepare and analyze it. Chapter 17 takes a more in-depth look at financial analysis. The chapter discusses the accountant's role in financial analysis and objectives of financial analysis. It further reviews ratios and horizontal and vertical analyses.
Week 5: Lesson Objectives
Chapter 16
· Explain the purposes and uses of the statement of cash flows.
· Describe the content of the statement of cash flows and where certain items would appear on the statement.
· Describe how to calculate cash flows from operating activities under both the direct and indirect methods.
· Prepare a statement of cash flows, under both the direct and indirect methods, showing cash flows from operating activities, investing activities, and financing activities.
· Analyze a statement of cash flows of a real company.
· Analyze and use the financial results–cash flow per share of common stock, cash flow margin, and cash flow liquidity ratios.
· Use working paper to prepare a statement of cash flows.
Chapter 17
· Describe and explain the objectives of financial statement analysis.
· Describe the sources of information for financial statement analysis.
· Calculate and explain changes in financial statements using horizontal analysis, vertical analysis, and trend analysis.
· Perform ratio analysis on financial statements using liquidity ratios, long-term solvency ratios, profitability tests, and market tests.
· Describe the considerations used in financial statement analysis.
Reading and Resources
Our reading for Week 5 includes Chapter(s) 16 and 17 of the textbook. Pay particular attention to the sections titled "Key Terms" throughout the reading. They provide a great way for us to see how what we are learning can be applied in the workplace. The "Understanding the Learning Objectives" section found at the end of the chapters are also a great way to be sure you understand what you have covered and can apply it to solve problems.
Accounting Principles: A Business Perspective, Financial Accounting (Chapters 9-18)
James Don Edwards, Roger H. Hermanson, and Bill Buxton
In addition to the required course text, the following public domain websites and video links are useful. Please abide by the university’s academic honesty policy when using Internet sources. Note website and video addresses are subject to change.
· American Psychological Association (APA) Style Website
· Purdue Online Writing La
· YouTube Video on Formatting an APA Style Pape
· Microsoft Office Training Website
· YouTube Videos on Microsoft Excel for Beginners
· Turnitin Website
· principlesofaccounting.com
· NetMBA.com