Chapter 14
“How Well Am I Doing?”
Financial Statement
Analysis
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Limitations of Financial Statement
Analysis
Differences in accounting methods
between companies sometimes make
comparisons difficult.
We use the LIFO method to We use the FIFO method to
value inventory. value inventory.
14-2
, Limitations of Financial Statement
Analysis
Changes within
the company
Industry Consumer
trends tastes
Technological
changes
Economic
factors
Analysts should look beyond
the ratios.
14-3
, Statements in Comparative and
Common-Size Form
Dollar and percentage
changes on statements
Analytical
techniques used to Common-size
examine statements
relationships among
financial statement
items Ratios
14-4
“How Well Am I Doing?”
Financial Statement
Analysis
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Limitations of Financial Statement
Analysis
Differences in accounting methods
between companies sometimes make
comparisons difficult.
We use the LIFO method to We use the FIFO method to
value inventory. value inventory.
14-2
, Limitations of Financial Statement
Analysis
Changes within
the company
Industry Consumer
trends tastes
Technological
changes
Economic
factors
Analysts should look beyond
the ratios.
14-3
, Statements in Comparative and
Common-Size Form
Dollar and percentage
changes on statements
Analytical
techniques used to Common-size
examine statements
relationships among
financial statement
items Ratios
14-4
