Financial Statement Analysis & Reporting

This unit develops students’ ability to analyze and interpret financial statements with attention to how transactions drive the balance sheet and income statement, the measurement of profit quality, and the calculation and limits of cash flow (including free cash flow). Students will apply double‑entry accounting to record transactions, assemble product cost and inventory COGS for manufacturers, evaluate disclosures (footnotes and MD&A), compute benchmark solvency and performance ratios, and prepare basic forecasts and capital‑raising tradeoffs.

Learning Objectives

• Analyze how business transactions affect the balance sheet, income statement, and statement of cash flows and calculate free cash flow, identifying limitations of cash‑flow analysis
• Apply double‑entry accounting to record transactions and prepare adjusted schedules for product cost, inventory valuation, and cost of goods sold for manufacturing operations
• Evaluate profit quality and adequacy of disclosure by interpreting footnotes, MD&A and accounting policy choices, and identify indicators of earnings management or biased reporting
• Demonstrate the ability to compute and interpret benchmark financial ratios for solvency and performance and use those measures to support basic financial forecasts and debt versus equity capital decisions