Chapter 01 - 001 Flashcards
Business analysis includes
analyzing a company’s
- business environment
- its strategies
- its financial position and performance
Business analysis is
The process of evaluating a company’s economic prospects and risks
Business analysis is useful in a wide range of business decisions such as
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- whether to invest in equity or in debt securities
- whether to extend credit through short- or long- term loans
- how to value a business in an IPO
- how to evaluate restructurings including mergers, acquisitions, and divestitures
Financial statement analysis is
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The application of analytical tools and techniques to general-purpose financial statements and related data to derive estimates and inferences useful in business analysis. I’m
What a financial statement analysis is and is not
- Reduces reliance on hunches, guesses, and intuition for business decision
- Decreases the uncertainty of business analysis
- Provide a systematic and effective basis for business analysis
- Does not lessen the need for expert judgment
Financial statement analysis is part of
Business analysis
Business analysis is
the evaluation of a company’s prospects and risks for the purpose of making business decisions
Business decisions extend to
Equity and debt valuation, credit risk assessment, earnings predictions, audit testing, compensation negotiations and countless other decisions
The annual report includes
- financial statements
- qualitative info about a company
- future plan
An initial step in business analysis is to
Evaluate a company’s business environment and strategyies
Write Colgate’s business analysis
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Financial statements and company’s resources
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How financial statements are being used by different people
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Exhibit 1.3
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Equity investors would desire answers to what question before deciding to buy, sell, or hold a company’s stock?
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