Financial Statement Analysis: Applications

Till now we learned about the various tools and financial reporting techniques an analyst can use for analysing financial reports of a business. In this reading, we will focus on how the analyst can apply these financial analysis tools and techniques to evaluate the past and future financial performance, assess credit risk, and screen potential equity investments.

This is a short reading and from the exam perspective, most of what you will see here has already been covered in the previous readings. You can consider this reading as a review of important concepts such as assessing credit quality, and analyst adjustments to financial statements in order to make them comparable with other companies’ reports.