A Pragmatist’s Guide to Leveraged Finance: Credit Analysis for Bonds and Bank Debt

9. A Primer on Key Points of Financial Statement Analysis

What’s in this chapter:

• What sections of the financial statement commentary to prioritize

• How to derive key figures from company financial statements

• Deriving EBITDA and deciding what to include in adjusted EBITDA

• Free cash flow and interest expense, capital expenditures, and changes in working capital

• What you should focus on from the balance sheet

This chapter shows you how to derive key data used in our analysis from a company’s financial statements. It also discusses other uses of these documents.

A company’s financial statements include more than just key numbers. Material amounts of descriptive information lend considerable insight to the analysis. Whenever possible, read ...