Financial Statement Applications from Coursera

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Syllabus

Module 1: Course Introduction and U.S. GAAP Framework

Welcome to Financial Statement Applications! This module allows students to build a foundational understanding of basic accounting concepts essential for financial analysis, delve into the accrual process under U.S. GAAP, and learn the steps of the accounting transaction process. Furthermore, the course clarifies how journal entries are effectively posted to the chart of accounts and subsequently reflected in financial statements, establishing a solid base for more advanced financial studies.

Module 2: Overview of Primary Financial Statements

This module provides an in-depth understanding of the fundamental financial statements, starting with the purpose and classifications of the balance sheet, including the application of the balance sheet equation. Students will explore the connectivity of the balance sheet with other financial statements and delve into the multi-step income statement, identifying crucial elements for financial analysis and its interrelation with other statements. A comprehensive overview of the statement of cash flows is also provided, detailing its layout, the three primary sections, and how it differs from and connects with the balance sheet and income statement. After this module, students will be equipped with the knowledge to analyze and interpret these key financial statements effectively.

Module 3: Ratios and Financial Analysis Tools

This module is designed to provide students with a comprehensive understanding of the various financial analysis tools available and the context in which each is most effectively utilized. It delves into the definition, categories, and interpretation of key financial ratios, teaching students how to extract and analyze relevant account information from primary financial statements. This module also addresses the limitations of financial ratio analysis and strategies to mitigate these shortcomings. Furthermore, students will learn to decipher the wealth of information contained in annual reports (10-K), equipping them with the skills to navigate financial reports for conducting trend analysis and applying other critical financial analysis techniques.

Module 4: Inventory Valuation and Other Balance Sheet Topics

This module offers a deep dive into the four inventory methods recognized under U.S. GAAP, elucidating their distinct impacts on financial statements. Students will learn to apply the general inventory valuation formula for analyzing a company's inventory and cost of goods sold, including understanding the implications of a LIFO liquidation. This module examines how FIFO, LIFO, and Average Cost methods influence a company's profitability, asset values, and after-tax cash flows, and how the choice between FIFO and LIFO affects financial ratios in different economic conditions. Additionally, it covers Non-GAAP inventory valuation adjustments for cross-company comparisons and explores the financial statement impacts of holding fixed assets versus intangible assets, including the differentiation between limited life and indefinite life intangibles.

Module 5: Cash Flow Analysis

This module emphasizes the crucial role of cash flow analysis in financial management, delineating how it fundamentally differs from profitability analysis. Students will gain the ability to determine the effects of various transactions on operating, investing, and financing cash flows, and identify significant non-cash transactions often disclosed in company footnotes. This module also teaches how to calculate and interpret different free cash flow metrics, understanding their relevance in various contexts. It also covers the derivation of EBITDA as an operating cash flow proxy and guides students through performing a comprehensive cash flow analysis on a chosen company. Finally, this module explores key cash flow financial ratios, equipping students with the analytical tools to assess the financial health and stability of businesses.

Module 6: Profitability Analysis

This module equips students with financial tools to effectively analyze a firm's profitability, including the significance of dissecting business segments in this context. Learners will explore key qualitative factors that influence periodic trends in a firm's profitability, gaining a comprehensive understanding of profitability assessment. This module also delves into U.S. GAAP requirements for capitalizing versus expensing costs, exploring how these accounting decisions are perceived by analysts and their impact on financial statements. Students will learn the concept and purpose of normalizing a firm's earnings, identifying specific income statement items that may require adjustments to obtain a clearer picture of its underlying earnings, thus enhancing their skills in accurate financial analysis and interpretation.

Module 7: Liquidity and Earnings Manipulation Recognition

In this module, students will master the use of liquidity ratios to accurately analyze a company's liquidity position, alongside a practical understanding of applying the cash conversion cycle. This module guides learners in identifying key qualitative liquidity factors within financial reports of public companies, enabling them to assess a company's overall liquidity health through a blend of qualitative and quantitative tools. Additionally, the module delves into the recognition of earnings manipulation techniques employed by company management, teaching students to use various sources to detect red flags indicative of manipulated earnings. This comprehensive approach provides a well-rounded skillset for evaluating corporate financial health and integrity.

Module 8: Solvency and Forecasting

This module delves into understanding the crucial quantitative and qualitative factors that define a firm's solvency position. Students will learn to calculate and interpret various solvency ratios, gaining insights into the implications of additional debt and its impact on financial leverage. This module also covers techniques for determining a firm's enterprise value and its correlation with reported capital structure. A key aspect includes using the Altman Z regression formula to detect signs of financial distress. Additionally, students will be introduced to the types and mechanics of financial forecasts, culminating in the practical skill of preparing a forecasted income statement based on key variables, equipping them with essential tools for informed financial decision-making and analysis.

Summative Course Assessment

This module contains the summative course assessment that has been designed to evaluate your understanding of the course material and assess your ability to apply the knowledge you have acquired throughout the course. Be sure to review the course material thoroughly before taking the assessment.

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Develops the advanced financial analysis skill set needed for credit analysis, financial analysis, and investment analysis

Taught by Michael Rybak, an instructor recognized for their work in the topic that the course teaches

Teaches how to use quantitative tools and qualitative methods to determine the financial health and risk of selected U.S. public companies

Uses the International Financial Statements Analysis textbook, often used in industry and in academic settings

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Financial Statement Applications with these activities:

Tutorial on using financial ratios for analysis

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Develop a strong foundation in using financial ratios to analyze and assess a company's financial health and performance.

Browse courses on Financial Ratios

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Identify and define key financial ratios used in financial analysis.
Learn how to calculate and interpret these ratios to gain insights into a company's profitability, liquidity, solvency, and efficiency.
Explore the limitations of financial ratio analysis and strategies to mitigate these shortcomings.

Practice inventory valuation formulas

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Gain proficiency in applying inventory valuation formulas to accurately assess a company's inventory and cost of goods sold.

Browse courses on Inventory Valuation

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Review the four inventory valuation methods recognized under U.S. GAAP: FIFO, LIFO, Average Cost, and Specific Identification.
Apply the general inventory valuation formula to analyze a company's inventory and cost of goods sold.
Understand the implications of a LIFO liquidation.
Calculate and compare the results of different inventory valuation methods on a company's profitability, asset values, and after-tax cash flows.

Group discussion on cash flow analysis

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Engage in peer discussions to deepen your comprehension of cash flow analysis and its significance in financial management.

Browse courses on Cash Flow Analysis

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Identify and discuss the three primary sections of the statement of cash flows: operating activities, investing activities, and financing activities.
Analyze and interpret key cash flow metrics such as EBITDA and free cash flow.
Identify and discuss the limitations of cash flow analysis.
Present the findings and insights gained from the group discussion.

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Presentation on the impact of earnings manipulation

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Enhance your understanding of earnings manipulation techniques and equip yourself with skills to detect and analyze their impact on financial statements.

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Research and identify common earnings manipulation techniques
Develop a presentation that explains these techniques and their impact on financial statements
Present the findings to your peers or instructors

Career center

Learners who complete Financial Statement Applications will develop knowledge and skills that may be useful to these careers:

Financial Analyst

Financial Analysts study financial data to make informed investment decisions for their clients. They provide insights into a company's financial health and performance, helping clients make profitable investment decisions. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed investment decisions, making this course highly relevant for aspiring Financial Analysts.

See salaries and explore the career path for Financial Analyst

Credit Analyst

Credit Analysts assess the creditworthiness of individuals and businesses to determine their ability to repay borrowed funds. They use financial analysis techniques to evaluate the financial health and risk of potential borrowers. The Financial Statement Applications course provides a deep dive into financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding and interpreting financial statements, making this course a valuable asset for aspiring Credit Analysts.

See salaries and explore the career path for Credit Analyst

Investment Banker

Investment Bankers advise companies on mergers and acquisitions, capital raising, and other financial transactions. They use financial analysis techniques to evaluate the financial health and risk of potential clients and to develop financial models to support their recommendations. The Financial Statement Applications course provides a comprehensive overview of financial analysis tools and techniques, including financial ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed investment decisions, making this course highly relevant for aspiring Investment Bankers.

See salaries and explore the career path for Investment Banker

Portfolio Manager

Portfolio Managers oversee investment portfolios for their clients, making investment decisions based on financial analysis and market research. They use financial analysis techniques to evaluate the financial health and risk of potential investments. The Financial Statement Applications course provides a thorough understanding of financial analysis tools and techniques, including financial ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed investment decisions, making this course a valuable asset for aspiring Portfolio Managers.

See salaries and explore the career path for Portfolio Manager

Auditor

Auditors examine financial records to ensure their accuracy and compliance with regulations. They use financial analysis techniques to identify potential errors or irregularities in financial statements. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding and interpreting financial statements, making this course a valuable asset for aspiring Auditors.

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Financial Planner

Financial Planners help individuals and families plan for their financial future. They use financial analysis techniques to assess their clients' financial needs and develop personalized financial plans. The Financial Statement Applications course provides a comprehensive understanding of financial analysis tools and techniques, including financial ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed financial decisions, making this course a valuable asset for aspiring Financial Planners.

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Accountant

Accountants prepare and examine financial records to ensure their accuracy and compliance with regulations. They use financial analysis techniques to identify potential errors or irregularities in financial statements. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding and interpreting financial statements, making this course a valuable asset for aspiring Accountants.

See salaries and explore the career path for Accountant

Budget Analyst

Budget Analysts develop and manage budgets for organizations. They use financial analysis techniques to forecast revenue and expenses, and to identify areas where spending can be optimized. The Financial Statement Applications course provides a comprehensive understanding of financial analysis tools and techniques, including financial ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed financial decisions, making this course a valuable asset for aspiring Budget Analysts.

See salaries and explore the career path for Budget Analyst

Financial Consultant

Financial Consultants provide financial advice to individuals and businesses. They use financial analysis techniques to assess their clients' financial needs and develop personalized financial plans. The Financial Statement Applications course provides a comprehensive understanding of financial analysis tools and techniques, including financial ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed financial decisions, making this course a valuable asset for aspiring Financial Consultants.

See salaries and explore the career path for Financial Consultant

Tax Accountant

Tax Accountants prepare and file tax returns for individuals and businesses. They use financial analysis techniques to identify potential tax deductions and credits. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding financial statements and making informed tax decisions, making this course a valuable asset for aspiring Tax Accountants.

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Forensic Accountant

Forensic Accountants investigate financial fraud and other financial crimes. They use financial analysis techniques to identify and analyze evidence of financial wrongdoing. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding financial statements and identifying potential financial fraud, making this course a valuable asset for aspiring Forensic Accountants.

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Management Consultant

Management Consultants advise businesses on how to improve their operations and performance. They use financial analysis techniques to evaluate a company's financial health and to identify areas where improvements can be made. The Financial Statement Applications course provides a comprehensive understanding of financial analysis tools and techniques, including financial ratio analysis, cash flow analysis, and profitability analysis. These skills are essential for understanding financial statements and making informed business decisions, making this course a valuable asset for aspiring Management Consultants.

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Risk Analyst

Risk Analysts assess the potential risks facing businesses and organizations. They use financial analysis techniques to identify and mitigate financial risks. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding financial statements and identifying potential financial risks, making this course a valuable asset for aspiring Risk Analysts.

See salaries and explore the career path for Risk Analyst

Data Analyst

Data Analysts use data to identify trends and patterns, and to make informed decisions. They use financial analysis techniques to analyze financial data and to identify potential investment opportunities. The Financial Statement Applications course provides a solid foundation in financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills are essential for understanding financial data and making informed investment decisions, making this course a valuable asset for aspiring Data Analysts.

See salaries and explore the career path for Data Analyst

Business Analyst

Business Analysts use data to analyze business processes and to identify areas where improvements can be made. They use financial analysis techniques to evaluate a company's financial health and to identify areas where improvements can be made. The Financial Statement Applications course may provide a useful overview of financial analysis tools and techniques, including financial ratio analysis and cash flow analysis. These skills may be helpful for understanding financial data and making informed business decisions.

See salaries and explore the career path for Business Analyst

Financial Statement Applications

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