Financial Statement Review and Trend Analysis - Part 2: Balance Sheets

Overview

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This class examines the profit and loss statement and balance sheet issues that clients are likely to face. It is in two sessions: a Profit and Loss Statement session and a Balance Sheet session. 

This session analyzes the balance sheet trends including liquidity issues (current ratio, acid test, and Accounts receivable to Accounts payable), debt, and usage (receivable days and inventory days).  It helps CPA’s spot impending cash and other balance sheet problems and what suggestions to give to clients to fix them before they become major crises. Attendees will use sample financial statements in the analysis process.

Highlights

• What to look for on a balance sheet to ensure that it is probably accurate

• Liquidity trends – definitions, what the current ratio, acid test (quick ratio), and accounts receivable to accounts payable trends should look like, reasons that it might not be trending in a positive manner, and where you should point a client to reverse the trends

• Inventory – should inventory be on a balance sheet?

• Debt trends – definitions, what the debt to equity and long-term debt to equity trends should look like, reasons that it might not be trending in a positive manner, and where you should point a client to reverse the trends

• Usage trends – definitions, what the trends should look like, reasons that it might not be trending in a positive manner, and where you should point a client to reverse the trends

• How to spot impending cash flow issues – what the graphs tell you to help your client spot issues and take care of them before they become major crises

Prerequisites

None

Designed For

CPA’s and other financial experts who prepare financial statements for their clients and want to help them analyze the statements.

Objectives

Notice