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Fundamentals of Corporate Finance by Robert Parrino

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4

Analyzing Financial Statements

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Learning Objectives

images Explain the three perspectives from which financial statements can be viewed.

images 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.

images Discuss how financial ratios facilitate financial analysis and be able to compute and use them to analyze a firm's performance.

images 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.

images Explain what benchmarks are, describe how they are prepared, and discuss why they are important in financial statement analysis.

images Identify the major limitations in using financial statement analysis.

The last three decades witnessed ...

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