Reading and Interpreting Financial Statements

Reading and Interpreting Financial Statements

These resources will help you to complete this discussion:

Ross, S. A., Westerfield, R. W., Jaffe, J. F., & Jordan, B. D. (2018). Corporate finance: Core principles and applications (5th ed.). New York, NY: McGraw-Hill.

These chapters look at the financial statements and introduce financial analysis tools such as trend analysis, ratio analysis, and industry average analysis:

Chapter 2, “Financial Statements and Cash Flow,” pages 19–42.

Chapter 3, “Financial Statements Analysis and Financial Models,” pages 43–82.

In Unit 1, you completed the Vila Health – Financial Statement Analysis activity, which gave you practice in reading and interpreting financial statements. At the end of it, you received results and feedback. Use what you learned as you complete this discussion.

Three tools for analyzing the current condition of a company are income statement, balance sheet, and statement of cash flows. Select a company to use for this discussion, and prepare a post that addresses the following:

Analyze the income statement, balance sheet, and statement of cash flows for a selected company. What does each of these tools tell you about the company?

Why is each of these tools important for management to use to monitor the current condition of the company?

What do these tools not tell you? How would financial ratios help in understanding the financial condition of the company?