How to Read Financial Statements: Build Financial Literacy.
Read financial statements and speak the language of business without the drudgery of a traditional accounting course
4.45 (1371 reviews)
6 708
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2.5 hours
content
Dec 2020
last update
$69.99
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What you will learn
Explain how the balance sheet, income statement, and statement of cash flows are used, what they measure, and why we need three statements.
Differentiate between income and cash flow
Explain what is the balance sheet equation and why the balance sheet equation is the foundational model for accrual accounting/double entry accounting
Define what are assets, liabilities, and equity and how assets, liabilities, and equity relate
Explain how the statement of cash flows and income statement link into the balance sheet
Explain how accounts work like buckets
Locate a real company’s annual report at their website and locate their financial statements within the annual report
Explain who are the six most important stakeholders of a corporation (employees, customers, government, vendors, lenders, investors)
Explain the give and take of a transaction and how to record both sides of the transaction separately with the six stakeholders
Explain which side of the give and take appears on the income statement and on the statement of cash flows
Explain why you can’t measure profit with cash and why you need to use accrual accounting (double-entry accounting), not cash accounting
Illustrate how accrual accounting can both record cash and profits using a spreadsheet
Explain the basis for bookkeeping and basic accounting without learning bookkeeping
Explain what each line item of the balance sheet means and distinguish between current and noncurrent assets, liabilities, and shareholders’ equity
Explain what each line item of the income statement means, including revenues, expenses, and earnings per share
Explain each important line item for the three sections of the statement of cash flows: operating activities, investing activities, and financing activities
Explain how the format of the operating activities section differs from the other two activities (investing and financing)
Test your knowledge by completing 28 multiple-choice questions about the 2013 Facebook annual report
Explain four areas that can go wrong in a business (sales pricing, expense control, asset management, and asset financing)
Explain how four ratios (return on equity, profit margin, asset turnover, and financial leverage) can detect problems within the four potential problem areas
Compute return on equity, profit margin, asset turnover, and financial leverage ratios from real company’s financial statements
For the return on equity ratio, drill down into its three component ratios (profit margin, asset turnover, and financial leverage) to pinpoint problem areas
Start with the profit margin ratio and drill down to compute the gross profit percentage and expense percentage from a real company’s financial statements
Locate management’s explanation for year-to-year changes in ratios from the company’s annual report
Summarize the key reasons for return on equity variations for a real company from year-to-year
Explain how four industries (distribution, manufacturing, service, and financial services differ in the way they make money
Explain how the profit margin, asset turnover, and financial leverage ratios can reveal the key differences in the way that four industries make money
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Our Verdict
A solid foundation builder for understanding financial statements, this course shines with its real-world examples and comprehensive coverage. Some dryness and pacing concerns do not deter from the overall value gain for beginners seeking to grasp fundamental concepts.
What We Liked
- Comprehensive coverage of financial statements and their components
- Real-world examples and company-specific information for contextual understanding
- Clear, concise language with great slides to enhance grasp of key elements
- Excellent tools provided for analyzing financial statements
Potential Drawbacks
- Delivery seemed dry and unengaging to some learners
- Cadence, tone, and grammar could be improved in lectures
- Additional company-specific information sometimes presented in a distracting manner
- Pace through slides in explanations might be too fast at times
Related Topics
306360
udemy ID
23/09/2014
course created date
01/02/2021
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