A Framework for Business Analysis and Valuation Using Financial Statement

1. Course : Business Valuation and Analysis
Effective Period : Februari 2018
A Framework for Business
Analysis and Valuation Using
Financial Statement
Session 1

2. If you are using PowerPoint from textbook, please use
this slide to give information about the source of the
slides.
Example:
These slides have been adapted from:
Krishna G. Palepu, & Paul M. Healy. (2012). Business Analysis and
Valuation: Using Financial Statement. 05. Cengage Learning. ISBN:
9781111972301.
Chapter 1
Acknowledgement

3. Learning Outcome
• LO 1 : Review The framework for financial statement
analysis, how to gather data from financial statements
and strategy analysis

4. ©2013 Cengage Learning.
All Rights Reserved. May
Chapter
1:
Framewor
k for
Business
Analysis
Using
Financial

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All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
Key Concepts in Chapter 1
• Financial statements are an important source of information to the
capital markets and business analysts.
• Analyzing financial statements addresses a number of issues of
interest to external stakeholders and company insiders.

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not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
The Role of Financial Reporting in
Capital Markets
• Financial reporting provide much needed information to capital
market participants
– Financial intermediaries depend upon the information in financial
statements to evaluate investment opportunities.
– Information intermediaries assure the quality of financial
statement representations.
– Relevant and reliable financial information is essential for the
functioning of capital markets.

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May not be scanned, copied or duplicated, or
posted to a publically accessible website, in whole
or in part.
.
How Capital Markets Function

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duplicated, or posted to a
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website, in whole or in part.
From Business Activities to
Financial Statements
• Financial statements measure and summarize the economic
consequences of business activities.
• Accounting systems facilitate information quality.
– The role of accrual basis accounting.
– The need for generally accepted accounting principles (GAAP).
– Auditing and the quality of financial information.

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May not be scanned, copied or duplicated, or
posted to a publically accessible website, in whole
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From
Business
Activities
to
Financial
Statements

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not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
Financial Statements and Business
Analysis
• Business intermediaries use financial statements to accomplish four
key objectives:
– Business strategy analysis
– Accounting analysis
– Financial analysis
– Prospective analysis

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May not be scanned, copied or duplicated, or
posted to a publically accessible website, in whole
or in part.
Business
Strategy
Analysis

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All Rights Reserved. May
not be scanned, copied or
duplicated, or posted to a
publically accessible
website, in whole or in part.
Concluding Comments
• Financial statements are source of widely available data on publicly
traded corporations.
• Accrual basis accounting attempts to accurately reflect expectations
of economic performance, but requires careful analysis.
• This chapter has outlined a useful framework for business analysis
using financial statements.