Analysis and Interpretation of Financial Statements

Learning objectives

After studying this chapter, you should be able to:

  • Describe and explain the objectives of financial statement analysis.
  • Describe the sources of information for financial statement analysis.
  • Calculate and explain changes in financial statements using horizontal analysis, vertical analysis, and trend analysis.
  • Perform ratio analysis on financial statements using liquidity ratios, long-term solvency ratios, profitability tests, and market tests.
  • Describe the considerations used in financial statement analysis.

Source: James Don Edwards and Roger H. Hermanson,
Creative Commons License This work is licensed under a Creative Commons Attribution 3.0 License.