Overview
If you're a business professional who could benefit from a more thorough grasp of financial statements, this course is tailor-made for you.
With this financial statement training, you'll quickly master the fundamentals and develop a comprehensive understanding of how they work, learn how to interpret them accurately and discover how to use their information to make more effective, better-informed business decisions that have a positive impact on your organization's bottom line.
Here's just a sample of what you'll learn:
- How to decipher general accounting terminology and gain a clear understanding of the language of finance and accounting
- Gain insights to vastly improve your working knowledge and interpretive ability for balance sheets, income statements and cash flow statements
- How to use your enhanced knowledge of financial statements to develop better budgeting, projection and forecasting skills
- Interpreting annual reports: how to translate their deluge of information into knowledge that can help you make informed decisions
- How to better communicate with accountants, bankers, comptrollers and other finance professionals
- Using financial ratios to analyze trends, conduct industry comparisons and predict financial problems before they become insurmountable
Agenda
First Things First — Basic Accounting Principles for Non-Financial Professionals
- How to use general accounting terminology (GAAP) like a pro
- Understanding the underlying assumptions accountants use when preparing financial statements: historical cost, revenue recognition, matching principles, product costs, period costs, full disclosure, conservatism, materiality and accrual accounting
- What the FASB, SEC and AICPA are and how they govern accounting methods
- Non-accounting considerations that affect the value of financial statements
- Two primary groups who are users of financial information — who they are, what they need to know
- The difference between managerial accounting and financial accounting
- Defining the role of the financial analyst
- The financial analysis techniques best suited to specific situations
The Income Statement
- Identify the components of a classified income statement
- Why tax expense on the income statement is not always the same as taxes paid during the year
- Understand why tax expense on the income statement is not always the same as taxes paid during the year
- Cost of Goods Sold — what this means to an analysis of expenses
- How to determine gross profit, compare to net profit and draw conclusions about a company’s operating environment
- The difference between operating expenses, fixed expenses and depreciating expenses
- How to calculate net profits or losses
The Statement of Cash Flow
- The purpose and general structure of the cash flow statement.
- Learning to distinguish between operating, investing and financing cash flows.
The Balance Sheet
- Discovering what a balance sheet is and what sets it apart from other financial statements
- How accounts are classified within the balance sheet
- Identifying cash, marketable securities, inventory and prepaid expenses on the balance sheet
- “Current,” “fixed” and “other” assets — what they are, and how to assess their value to the company
- How to recognize an organization’s liquid assets
- Historical cost depreciation and amortization — what the weaknesses are
- The difference between short- and long-term liabilities
- When liabilities can be evaluated as assets
- Equity: what it is, where it appears on the balance sheet, how it relates to an organization’s liabilities
- Using comparative analysis to assess an organization’s financial picture over a specified period of time
Understanding and Analyzing Financial Statements
- What financial statements can’t tell you — review the limitations of financial analysis
- Using horizontal analysis to determine increases or decreases in income, profits and expenses
- How to use vertical analysis to compare individual income and expense amounts with net sales
- An introduction to ratio analysis
- Applying ratios to determine profitability: proven formulas for net profit margin, net operating margin, return on assets, return on equity, earnings per share and more
- Current and quick ratios — two ways to determine your organization’s liquidity
- A must-know formula for revealing inventory turnover and ensuring inventory management is on track
- Using numerous other ratios to compare, analyze and make sense of financial data, including:
- Current liability to owners’ equity
- Fixed assets to owners’ equity
- Long-term debt to working capital
- Inventory to working capital
- Long-term debt to total capitalization
- Fixed assets to long-term debt
- Operating ratio
- Owners’ equity turnover
- Networking capital turnover
- Return on investment
- Exploring the use of financial ratios to analyze trends, make industry comparisons and predict financial problems
- Evaluating capital investment proposals by calculating:
- The present values of future cash flows and annuities
- The net present values and internal rates of return
What you need to know about public reports and audits.
- The difference between public and non-public quarterly statements
- Compilation reports for non-public companies — what they are and how to read them
- Reports to the Securities and Exchange Commission
- Forms 10-K, 10-Q and 8-K — and what information is required for each
- Identifying the difference between government and not-for-profit accounting and reporting
- What an encumbrance is and how it is used
- How fiscal responsibility plays into governmental and not-for-profit reporting
- What fund accounting is and how to use it
- The three types of funds — Governmental, Proprietary, Fiduciary — and the purpose of each
- Using audit reports to accurately assess company performance
- Should your company be audited? Learn when the situation is right to request an audit and how to prepare for one
- The difference between internal and external auditors
- How to read and understand the two types of audits: financial statement audits and operational audits
- Learning about each step of the audit process
- How to read an audit report and apply the results to address your company’s needs
- The challenges auditors face and how you might be affected
