Overview

Financial Statement Analysis extracts information from a company’s financial statements in order to analyze the company’s financial performance, to assess its strengths and weaknesses, and to compare it to others.  Financial Statement analysis is used by many different people, including:

·         Investors who are interested in the profitability of the company and its ability to grow shareholder
           value

·         Analysts who provide recommendations on the company’s stock

·         Company’s managers to improve performance

·         The company’s creditors who decide whether to lend money to the company

The FTS Financial Statement Analysis Module is a unique “hands-on” way to learn Financial Statement analysis:

·          You work with actual company filings, not simplified examples of financial statements

·         The learning environment is highly interactive and highly structured, with immediate and detailed
           instructions at every step

·         You can test your knowledge at any time by turning off the detailed instructions

·         Once you have mastered the steps, you can use your skills to analyze any of the over 4000 companies
          whose filings we cover

The tools underlying Financial Statement analysis are inherently practical in nature.  The concepts themselves are not difficult, but the subject is complex for three reasons:

·         There are many different measures of company performance

·         Companies have a lot of flexibility in how they report their information, so extracting information from
          financial statements to calculate these measures has many practical details associated with it

·         Putting together the different measures to come up with a full assessment requires judgment and this
          can only be developed through experience

The FTS Financial Statement Analysis Module, this guide, and accompanying videos, have been developed with the view that this is one subject where a hands-on, learning-by-doing approach adds immense value.  As you extract information and construct ratios, you absorb important practical details along the way.  For example, you will start to see how different companies report information, how to map this information into the ratios, and as you gain experience, you will start developing the judgment needed to interpret the measures.

To help you learn in a step-by-step manner and at your own pace, we provide a Self-Assessment Dataset.   The dataset covers several companies, and is based on the latest filings.  You have to construct the ratios, but you get help along the way.  You can work with different companies and follow your own path: either work through every concept for a company, or explore each concept for different companies before moving on.  You can choose to receive help at one of three levels: detailed step-by-step instructions, less detailed hints, and finally a minimal hint telling you what needs to be done.   One way to reinforce your learning is to start with detailed hits, and then try and solve the problem again with minimal hints.  That way, you can easily tell whether you have mastered the material.

The videos, available at this site, show you how to use the software.  Once you are proficient at constructing and interpreting the performance measures, you can continue to work with the software and analyze any of the over 4000 companies whose statements are accessible through the software.