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Financial Statements II - Reynolds Week 2011
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Financial Statements II - Reynolds Week 2011

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Jimmy Gentry on 'Financial Statements II" at Reynolds Business Journalism Week, Feb. 4-7, 2011. …

Jimmy Gentry on 'Financial Statements II" at Reynolds Business Journalism Week, Feb. 4-7, 2011.

Reynolds Center for Business Journalism, BusinessJournalism.org, Arizona State University's Walter Cronkite School of Journalism.

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  • 1. Accounting II: Tools for Analysis
            • Strictly Financials
            • Jan. 5, 2011
  • 2.
    • Donald W. Reynolds National Center
    • For Business Journalism
    • At Arizona State University
    Strictly Financials
  • 3.
    • James K. Gentry, Ph.D.
    • Clyde M. Reed Teaching Professor
    • School of Journalism and Mass Communications
    • University of Kansas
    • [email_address]
    Strictly Financials
  • 4. Common Size Analysis
    • A technique that turns all financial statement entries into percentage of revenue
    • Then can look at percentage change and percentage point change
    Strictly Financials
  • 5. Why Common Size
    • Identify trends
    • Identify what causes changes in totals on financial statements
    • Easier to compare percentages than raw numbers
    • Easier to compare companies
    • Easier to compare company with industry averages
    Strictly Financials
  • 6. Doing Common Size
    • For IS, divide Revenue into all entries.
    • For BS, divide each total category into its category items. For example, divide Total Assets into each category of assets.
    • For CF, divide each total category into its category items.
    Strictly Financials
  • 7. Comparable Statements
    • Often have to restructure Income Statement to the In-the-Box format we studied
    • Typical problems come from items we would consider Other Income/Expenses
    Strictly Financials
  • 8. Trends in Margins
    • How have Cost of Goods Sold and Sales, General & Administrative changed?
    • What does that mean for Gross Profit and Operating Profit?
    • How does Net Profit Margin move?
    • Value of using Basis Points
    Strictly Financials
  • 9. Common Size, Ratios
    • These techniques let you drill below the surface and start developing a more complete picture of the company’s performance
      • Strengths
      • Weaknesses
      • Strategic effectiveness of the firm
    Strictly Financials

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