This course covers financial statement analysis using real examples from financial statements. I developed the course from my experience doing financial statement analysis for clients in various accounting and financial consulting roles over the years.
The course is geared towards anyone interested in improving their financial statement analysis skills. Seasoned investors on Wall Street, individual investors, students, bankers and others looking for a practical way to analyze financial statements can benefit from this course.
The course teaches how to assess earnings, cash flow and balance sheet quality using practical examples. It explains how the types of questions to answer when analyzing financial statements, how to detect red flags, how to use common size size and ratio analysis to uncover hidden risks, and how to read and interpret the 10-K.
Learn what to look for when analyzing financial statement items such as revenue, inventories, income taxes, pensions, stock-based compensation, stock buybacks, reserves, among others. The course includes a list of red flags you can use in your financial statement analysis.
The course is a video format utilizing PowerPoint slides. No material is needed for the course, except writing materials if the student wishes to take notes.
This course is designed to be different from other financial statement analysis courses. While there will be some overlap, the areas I focus on in this course are based on information gleaned from actually working with investors and and other clients, and getting to understand the areas they are most concerned about. The real world experience applied to this course is what differentiates it.
Learn the definition of financial statement analysis, why it is important and who can benefit from it
The four-step financial statement analysis process I recommend.
An example of how to separate core earnings from non-core earnings
Introduction to and the usefulness of earnings quality analysis
In this lecture I will demonstrate how to answer the first question from Step 1 of Earnings Quality Analysis: Are Earnings from the Core Business?
In this lecture I will demonstrate how to answer the second question from Step 1 of Earnings Quality Analysis: Are Earnings Recurring or Non-recurring? The lecture includes an example on how changes in Ford Motor Company's accounting for pension expenses impacted the company's earnings.
In this lecture I will demonstrate how to answer the third question from Step 1 of Earnings Quality Analysis: Are Earnings Subject to Management Judgment?
This is the first of a two-part lecture on the fourth question from Step 1 of Earnings Quality Analysis: Is the Company Converting Earnings to Cash?
This lecture presents an example using Twenty-First Century Fox to answer the question of whether the company is converting its earnings to cash?
Learn how to do a common size analysis of the income statement.
A common size analysis of Vertex Pharmaceutical's 2015 income statement.
An example of a common size analysis using Vertex Pharmaceuticals
Earnings quality analysis conclusion: combining steps one through four.
Introduction to balance sheet quality analysis and and how to distinguish between a high-quality and a low quality balance sheet.
Answer questions one and two of Step one of balance sheet quality analysis: Are the assets and liabilities fairly stated and are there hard-to-value assets and liabilities?
Answer questions three and four of Step one of balance sheet quality analysis: Do asset maturities match liability maturities and how liquid/leveraged is the balance sheet?
Balance sheet common size analysis using an example from Vertex Pharmaceuticals.
Balance sheet quality analysis conclusion: combining steps one through four.
Introduction to cash flow analysis and understanding the different types of cash flows
Answer questions related to cash flows: are cash flows from the core business, are cash flows recurring or non-recurring, and are there adjustments to make to free cash flows.
Ratio analysis for operating cash flows and wrap up of cash flow quality analysis.
Combining earnings quality, balance sheet quality and cash flow quality analyses to form an overall opinion on the quality of the financial statements.
Overview of the four parts and main items in the 10-K.
Learn how to identify significant risks and analyze financial data. Includes examples from Level 3 Communications and HP Inc.
The first of two lectures on MD&A. This lecture covers the results of operations and liquidity resources sections of the MD&A, and includes examples from Opko Health's 2015 10-K.
The second of two lectures on MD&A. This lecture covers the critical accounting estimates and contractual obligations and commitments sections of the MD&A, and includes examples from Popular Inc.'s and Opko Health's 2015 10-Ks.
This lecture is an overview of Item 8 - Financial Statements and Supplementary Data.
Learn what to look for when analyzing revenue, including an example from Boeing's 2015 10-K.
Understanding and analyzing stock-based compensation, including an example from Oracle's 2015 10-K.
What to look for when analyzing pensions.
This is the first of two lectures on how to analyze income taxes, and includes an example from IBM's 2015 10-K.
This is the second of two lectures on how to analyze income taxes.
Learn what to look for when analyzing mergers and acquisitions.
How to analyze intangible assets.
What to look for when analyzing financial instruments.
What to look for when analyzing receivables.
What to look for when analyzing inventories.
What to look for when analyzing property, Plant and Equipment.
Understanding the different types of reserves and how to analyze reserves.
How to estimate the impact of share repurchases on earnings per share. Includes an example showing the impact of IBM's 2015 share repurchases on the company's earnings per share.
Discussion of other important 10-K items.
Course recap and conclusion.
Jason Williams is an entrepreneur, accountant and investment professional, with two decades of experience in the public and private sector. Jason has worked in Credit Suisse's Accounting and Tax Research Group, the Public Company Accounting Oversight Board and Glass Lewis and Company, a corporate governance and forensic research firm. He has a Bachelors degree in Management Studies from the University of the West Indies, Jamaica and an MBA from the University of Connecticut. Jason is also a CPA and a Chartered Accountant, and holds Series 7, 63, 86 and 87 securities licenses.