Financial Analysis Skills (FAS)

مهارات التحليل المالي

FAS Objectives

  • Understand the fundamentals of financial statements, including how the statements link and the key accounting principles that govern them
  • Analyze the balance sheet of companies and assess their position
  • Analyze the income statement of companies and assess their performance
  • Carry out ratio analysis and assess the drivers of performance
  • Analyze the cash flow statement of companies and assess the cash flow drivers
  • Carry out an overall appraisal of a company based on financial and operating data
  • Compare a company’s performance against that of its industry peers to gain valuable insights.

FAS Topics

The process, purpose and context of accounting

  • Background accounting knowledge for analysts to help understand the basis of financial statements

The primary financial statements and how they link

  • Balance sheet: Showing the position of a company
  • Income statement: Showing the performance of a company
  • Cash flow statement: Showing the difference between a company’s ability to generate and spend cash

Key accounting principles and terms

  • Accruals concept
  • Going concern
  • Double entry
  • Accounting Standards

Analysis of the Balance Sheet

  • Non-current assets
  • Intangibles
  • Current assets
  • Creditors and debt
  • Equity capital and reserves

Analysis of the income statement

  • Different types of profit metric: Gross profit, operating profit, net profit
  • Classification of expenses: Cost of sales, operating expenses
  • Capitalization vs. expense
  • EBIT, EBITA, EBITDA

Ratio analysis

  • Horizontal Analysis
  • Vertical Analysis
  • Liquidity Analysis
  • Solvency Analysis
  • Profitability Analysis
  • Asset Management
  • Performance: Margin ratios, return on equity
  • Working capital: Inventory days, receivable days, payable days
  • Debt service: Interest cover
  • Leverage: Debt: EBITDA, Debt: FCF

Analysis of the cash flow statement

  • How to analyze the cash flow statement: Asset management, operational management, financing strategy

Prerequisites

Basic understanding of accounting and/or finance.

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