4
Analyzing Financial Statements
Learning Objectives
Explain the three perspectives from which financial statements can be viewed.
Describe common-size financial statements, explain why they are used, and be able to prepare and use them to analyze the historical performance of a firm.
Discuss how financial ratios facilitate financial analysis and be able to compute and use them to analyze a firm's performance.
Describe the DuPont system of analysis and be able to use it to evaluate a firm's performance and identify corrective actions that may be necessary.
Explain what benchmarks are, describe how they are prepared, and discuss why they are important in financial statement analysis.
Identify the major limitations in using financial statement analysis.
The last three decades witnessed ...
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