Financial Management: Principles and Applications, 13/e

Chapter Summaries

4.1 Explain what we can learn by analyzing a firm’s financial statements. (pg. 80)

Summary:

Financial statements provide information useful both to the management of the firm being analyzed and to outsiders who are concerned about the firm’s financial performance. Consequently, financial statement analysis is useful for both internal analysis directed at such things as assessing employee performance, analyzing business unit or divisional performance, preparing financial forecasts, determining the creditworthiness of a potential new credit customer, and applying for bank loans. External analysis of a firm’s financial statements is frequently performed by lenders who are considering whether to extend credit to the firm and by ...