Accounting

Financial Statement Analysis: Quantitative Techniques — Analyzing Solvency, Price Multiples, and Cash Flow (Portfolio 5134)

  • This portfolio explains and illustrates how users of financial statements can employ a wide variety of quantitative techniques to improve the usefulness of the information contained in those statements.

Description

BNA Tax and Accounting Portfolio 5134-2nd, Financial Statement Analysis: Quantitative Techniques-Analyzing Solvency, Price Multiples, and Cash Flow (Accounting Policy and Practice Series), explains and illustrates how users of financial statements can employ a wide variety of quantitative techniques to improve the usefulness of the information contained in those statements. This work complements BNA Tax and Accounting Portfolio 5133-2nd, Financial Statement Analysis: Quantitative Techniques-Analyzing Liquidity, Profitability, and Asset Utilization (Accounting Policy and Practice Series), as well as other Portfolios in the Accounting Policy and Practice Series that focus on specific accounting subjects.

The three major categories of quantitative techniques discussed in this Portfolio are:

  •  trend analysis, which analysts use to identify changes in financial statement and related information within an organization over time;
  •  common-size analysis, which helps analysts compare an organization’s financial position and performance with those of other organizations and with industry or sector benchmarks; and
  •  ratio analysis, which allows analysts to examine various relationships among financial statement items and related information.

The Portfolio explains and illustrates how analysts employ those techniques to meet the objectives of analyzing an organization’s (1) long-term financial risks arising from the use of debt, (2) overall performance in the securities market, and (3) operating, investing, and financing cash flows. The Portfolio also explains several integrated frameworks that help analysts comprehensively assess an organization’s overall financial performance using financial statements and related information. These integrated frameworks use many of the quantitative techniques explained in the Portfolio’s first sections. In addition, the Portfolio describes and illustrates the financial statement forecasting process. This Portfolio’s Worksheets contain sample disclosures of financial statement information and quantitative analyses.

The Portfolio contains numerous examples of questions that various types of financial statement users address during quantitative financial statement analyses. A complete financial statement analysis, however, requires using qualitative techniques to more fully assess an organization’s actual financial position and performance and more accurately forecast the organization’s value. BNA Tax and Accounting Portfolio 5122-2nd, Financial Statement Analysis: Qualitative Techniques (Accounting Policy and Practice Series), describes and illustrates those qualitative techniques.

This Portfolio may be cited as BNA Tax and Accounting Portfolio 5134-2nd, Glazer and Stevens, Financial Statement Analysis: Quantitative Techniques-Analyzing Solvency, Price Multiples, and Cash Flow (Accounting Policy and Practice Series).

Table of Contents

I. Scope of Portfolio
II. Debt and Solvency Analysis
III. Price Multiples and Valuation Analysis
IV. Cash Flow Analysis
V. Integrated Quantitative Analysis Frameworks
VI. Financial Statement Forecasting

Alan Glazer
Stager Professor of Business
Franklin and Marshall College
stevens_glenn_2015
Glenn Stevens
Professor of Finance
University of Maryland University College