Analyzing an Annual Report

Overview/Description
 This course will familiarize business managers, financial professionals, and other business professionals with methods to extend their analysis of financial statements beyond the three basic reports: the Balance Sheet, Income Statement, and Cash Flow Statement. The course begins by analyzing two accounting features often identified in the notes to the financial statements: the cost of goods sold measurement and depreciation methods. It will conclude with a demonstration of the application of the DuPont System of Analysis to an annual report.

Target Audience
 This course is targeted specifically for business managers, financial professionals, and other business professionals who have the need to understand financial statements.

Expected Duration
4.5 hours

Lesson Objectives:

The Cost of Goods Sold Measurement

  • recognize the value of understanding the reporting options for the cost of goods sold expense to an analysis of a financial report.
  • analyze the implications of the FIFO procedure on a company's financial records.
  • analyze the implications of the LIFO procedure on a company's financial records.
  • analyze the implications of the average cost procedure on a company's financial records.
  • analyze the cost of goods sold strategy in terms of a company's annual report.

    • Depreciation, Amortization, and Goodwill Procedures

  • recognize the significance and implications of using goodwill impairment testing and different depreciation and amortization procedures when analyzing an annual report.
  • analyze the impact of straight-line depreciation on an annual report.
  • analyze the impact of accelerated depreciation on an annual report.
  • analyze the impact of amortization recording procedures on an annual report.
  • analyze the impact of a given goodwill acquisition on a company's bottom line, using impairment testing.
  • analyze the impact of straight-line and accelerated depreciation and amortization recording strategies on an annual report.

    • Performance Analysis Using DuPont and the P/E Ratio

  • recognize the value of using the DuPont system and the P/E ratio to analyze financial information presented in the annual report.
  • use the DuPont system to analyze the profitability of different operating segments of a business.
  • use information obtained in the annual report to calculate and analyze the P/E ratio.

    • Course Number: FIN0258