Task Team of FUNdaMENTAL aCCOUNtIng School of Business. Sun Yat-sen University Less Lesson 10 Understanding and Using Financial Statements Learning objectives 1. Describe the need and supply for financial statement analysis 2. Learn basic financial statement analytical procedures 3. Perform horizontal and vertical analysis on financial statement accounts and interpret the data 4. Calculate a number of ratios related to efficiency, solvency, liquidity, and profitability and explain the information supplied by each, individually and collectively Aware of the limitations of financial statement analysis Teaching hours Students major in accounting: 3 hours Other students Teaching contents The financial condition and the results of operation of business enterprise are of interest to many groups, including owners, managers, creditors, governmental employees, and prospective owners and creditors. The principal financial statements, toge supplementary statements and schedules, present much of the basic information needed to make sound economic decisions regarding business enterprises. In this lesson, the various ways in which financial statement data can be analyzed to assist in making these decisions will be discussed Demand and supply of financial analysis Demand of financial analysis Parties demanding financial statement information include Shareholders, investors and security analysts; Employees Lenders and other sup Customers, Government regulatory agencies These parties can also be grouped into internal versus external users. Internal users onsist of managers and employees while external users consist of the rest in the above list.Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University Lesson notes Lesson 10 Understanding and Using Financial Statements Learning objectives 1. Describe the need and supply for financial statement analysis. 2. Learn basic financial statement analytical procedures. 3. Perform horizontal and vertical analysis on financial statement accounts and interpret the data obtained. 4. Calculate a number of ratios related to efficiency, solvency, liquidity, and profitability and explain the information supplied by each, individually and collectively. 5. Aware of the limitations of financial statement analysis Teaching hours Students major in accounting: 3 hours Other students: 6 hours Teaching contents The financial condition and the results of operation of business enterprise are of interest to many groups , including owners, managers, creditors, governmental agencies, employees, and prospective owners and creditors. The principal financial statements, together with supplementary statements and schedules, present much of the basic information needed to make sound economic decisions regarding business enterprises. In this lesson, the various ways in which financial statement data can be analyzed to assist in making these decisions will be discussed. Demand and supply of financial analysis Demand of financial analysis Parties demanding financial statement information include: ⚫ Shareholders, investors and security analysts; ⚫ Managers; ⚫ Employees; ⚫ Lenders and other suppliers; ⚫ Customers; and ⚫ Government regulatory agencies These parties can also be grouped into internal versus external users. Internal users consist of managers and employees while external users consist of the rest in the above list