Analyzing Financial Statements

What’s in a number, if a company has a current ratio of 2:1 what does that mean and will I base my credit decision on that number?

If I see grocery stores have an average inventory turnover of 45:1 and mine is only 9:1 are we doing something wrong?

Ratios by themselves cannot always give you everything you need so you need to be resourceful and know where to go to get the answers.

To accommodate those needs this session will teach you how to use the Balance sheet, Income statement and the Statement of cash flows and the associated ratios along with other tools to help you make a sound credit.

WHY SHOULD YOU ATTEND?

The session will cover calculating ratios in the following areas: Activity ratios, Profitability ratios, Liquidity ratios, Debt Ratios, Altman Z score.

To learn how to read a Balance Sheet, Income statement and Statement of cash flows and understand the importance of each and what it means.

It will also show you how to write up an account summary with everything in it to present to management with your credit decision.

AREA COVERED

• Financial analysis.
• Gross and Net sales.
• Cost of goods sold.
• Gross margin.
• EBIT.

LEARNING OBJECTIVES

• Understanding how to tie in the main three financial statements together and make a sound credit decision.
• Learn the importance of the Altman Z score.
• Learning what each of the financial ratios are actually telling you.
• Understanding the importance of cash to the organization.
• Is DSO the best measure to determine your Credit’s collection ability.
• How to write up a proper summary after your analysis for management to support your decision.

WHO WILL BENEFIT?

• Bankers.
• Credit managers.
• Credit Analysts.
• People working in FP&A.
• Small business owners.
• General Managers.
• Attorneys.