BAR 01 Financial Statement Analysis

    ​Welcome to the BAR audio notes. I'm Logan, and before we get into the audios, I just want to point out a few things. The best way to use these audio notes is in conjunction with the SuperfastCPA review notes and the mini quizzes. Really try and use all the different study tools at different times each day because they each affect your understanding slightly differently, but you will probably find one or two that you end up using the most.

    Specifically for the audio notes, your main focus should be to listen to them from start to finish over and over again. Listen to them any chance you can, (driving in your car, walking the dog, doing the dishes and so on.) No need to try to find specific topics, just listen through, start to finish. All right with that said, let's get started.

    Application: Determine attribute structures, format, and sources of data needed to prepare financial statement analysis.

    In this first section, the task is Application: Determine attribute structures, format, and sources of data needed to prepare financial statement analysis.

    Let's start by understanding attribute structures.

    Attributes of financial data refer to specific details or characteristics essential for analysts. These attributes include the time period, accounting standards used, whether the data is consolidated or unconsolidated, audited or unaudited, and historical versus forecasted.

    For the time period, it's important to identify whether the data pertains to a specific month, quarter, or year. Regarding accounting standards, we're looking at whether U.S. Generally Accepted Accounting Principles, International Financial Reporting Standards, or another local standard is used. Consolidated data represents the entire group of companies, while unconsolidated data pertains to just one entity. Audited information signifies reliability and thoroughness, in contrast to unaudited data. Finally, historical data is based on actual results, while forecasted data is based on projections.

    Next let's delve into the format of financial data. This pertains to how data is presented and structured, which is critical for systematic analysis. We have the balance sheet, showing assets equals liabilities plus equity, providing a snapshot at a specific point in time. The income statement represents performance over a period, detailing revenue, expenses, and the resulting net profit or loss. The cashflow statement shows the sources and uses of cash under operating, investing, and financing activities. The statement of changes in equity displays alterations in the owner's equity over a period. Notes to the financial statements offer additional details and explanations about items in the main statements. There's also vertical analysis, where each item on a statement is represented as a percentage of a base figure. Horizontal analysis compares financial data over time, showcasing changes in numbers and percentages.

    Lastly, we'll explore the sources of data for financial statement analysis. The company's annual report is a go-to resource, providing a comprehensive yearly review of performance. For U.S. Public companies, 10-K and 10-Q forms filed with the Securities and Exchange Commissions offer annual and quarterly information, respectively. The company's investor relations website often posts financial statements and other relevant reports. For detailed financial data, tools like Bloomberg, Reuters, and FactSet are invaluable alongside free resources like Yahoo Finance, and Google Finance. Competitor's and industry reports are beneficial for comparative analysis. Lastly, audit reports can provide an external perspective on the accuracy of a company's financial statements.

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