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Financial Statements II - Reynolds Week 2011
 

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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    Financial Statements II - Reynolds Week 2011 Financial Statements II - Reynolds Week 2011 Presentation Transcript

    • Accounting II: Tools for Analysis
              • Strictly Financials
              • Jan. 5, 2011
      • Donald W. Reynolds National Center
      • For Business Journalism
      • At Arizona State University
      Strictly Financials
      • James K. Gentry, Ph.D.
      • Clyde M. Reed Teaching Professor
      • School of Journalism and Mass Communications
      • University of Kansas
      • [email_address]
      Strictly Financials
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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