Financial Statement Analysis

The financial summary provides a statistical summary of the past and complements the company-specific analysis. A financial statement analysis of a company begins with the assumption that the statements are not misleading or fraudulent. Although, with publicly traded stocks, a CPA is required to supervise the statements, firms have flexibility in their use of accounting methods. This may exaggerate or inflate earnings in audited data. The analyst who is studying the historical data aims at preparing an estimate of current earnings power. This is ...