2
Financial Statement Analysis
Learning Objectives
By the end of this chapter, you should be able to:
• Outline the priorities of the three primary groups with an interest in the company and its financial statements: creditors, investors, and management.
• Describe the structure and content of the balance sheet and the income statement.
• Describe the structure and content of the statement of stockholders’ equity and the statement of cash flows.
• Define financial analysis and list its limitations.
• Explain the role of ratio analysis in evaluating financial data.
• Perform horizontal analysis.
• Perform vertical analysis.
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