Analysis of Financial Statements Vocabulary

Flashcards covering key vocabulary from the financial statement analysis lecture notes.

Financial Statement Analysis

Critical evaluation of financial information in financial statements to understand and make decisions about a firm's operations.

Analysis (in financial analysis)

Simplification of financial data through methodical classification in financial statements.

Interpretation (in financial analysis)

Explaining the meaning and significance of financial data after it has been analyzed.

Cross Sectional Analysis

Comparison with other firms.

Time Series Analysis

Comparison with firm's own performance over a time period.

Comparative Statements

Statements showing profitability and financial position for different periods in a comparative form.

Comparative Statements

Also known as 'Horizontal Analysis'.

Common Size Statements

Statements indicating the relationship of different items of a financial statement with a common item, expressed as a percentage.

Common Size Statements

Also known as 'Vertical analysis'.

Trend Analysis

Technique of studying operational results and financial position over a series of years to observe percentage changes over time.

Ratio Analysis

Analysis of the significant relationships between various items of the balance sheet and statement of profit and loss.

Cash Flow Analysis

Analysis of the actual movement of cash into and out of an organization.

Cash Inflow

The flow of cash into the business.

Cash Outflow

The flow of cash out of the business.

Comparative Statement Format

Statement presenting figures for the current year, previous year, and changes during the year in both absolute and relative terms.

Common Size Balance Sheet

A balance sheet where each item is stated as a percentage of total assets or total liabilities.

Common Size Statement of Profit and Loss

A statement of profit and loss where items of expenditure are shown as a percentage of revenue from operations.

Inter-firm Comparison

Analysis of financial data by comparing a company to others.

Common Size Statement

A financial tool studying the key changes and treads in financial position and operational result of a company.