- C1 Financial statement analysis
- Evaluating the relevance, safety, and profitability of a business using its financial statements.
- C1 General-purpose financial statements
- Statements distributed to a wide range of external users, not tailored to one reader.
- C1 Building blocks of analysis
- The four aims of statement analysis: liquidity and efficiency, solvency, profitability, and market prospects.
- A1 Liquidity and efficiency
- A company's ability to meet short-term obligations and to use its assets productively.
- A2 Solvency
- A company's ability to meet long-term obligations and survive over a long period.
- A3 Profitability
- The ability to earn a satisfactory income.
- A4 Market prospects
- A company's prospects as seen through the price and returns of its stock.
- C1 Standards for comparison
- A benchmark for judging a ratio: the company's own past (intracompany), a competitor, or an industry guideline.
- P1 Horizontal analysis
- Comparing a company's financial condition and performance across two or more periods.
- P1 Comparative financial statements
- Statements showing two or more periods side by side, the basis for horizontal analysis.
- P1 Trend analysis
- Horizontal analysis extended across several periods, expressed as an index against a base period.
- P1 Vertical analysis
- Comparing each line of a single period's statement to a base amount within that same statement.
- P1 Common-size financial statements
- Statements where every amount is expressed as a percent of a base — net sales for the income statement, total assets for the balance sheet.
- A1 Ratio analysis
- Expressing the mathematical relation between two financial statement amounts.
- A1 Working capital
- Current assets minus current liabilities.
- A2 Equity ratio
- Total equity divided by total assets, showing how much of the assets owners financed.
- A2 Financial leverage
- Financing assets with liabilities in addition to equity, magnifying both gains and losses to owners.
- C1 Analysis report
- A written report communicating the results of a financial statement analysis.
- C1 Discontinued segments
- [book?] — check this edition’s exact terminology. Operations a company has sold or is ending, reported separately from continuing operations.
- C1 Other comprehensive income
- [book?] — check this edition’s exact terminology. Certain gains and losses excluded from net income but included in total equity.