Seeing is believing!

Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.

Find out more
Subject 2. The Roles of Financial Statement Analysis PDF Download

The role of financial reporting is to provide information about a company's financial position and performance for use by parties both internal and external to the company. Financial statements are issued by management, who is responsible for their form and content.

The role of financial statement analysis, on the other hand, is to take these financial statements and other information to evaluate the company's past, current, and prospective financial position and performance for the purpose of making rational investment, credit, and similar decisions.

The primary users of financial statements are equity investors and creditors.

  • Equity investors are primarily interested in the company's long-term earning power, growth, and ability to pay dividends.
  • Short-term creditors (e.g., banks and trade creditors) are more interested in the company's immediate liquidity, because they seek an early payback of their investment.
  • Long-term creditors (e.g., corporate bond owners such as insurance companies and pension funds) are primarily concerned with the company's long-term asset position and earning power.

User Contributed Comments 5

User Comment
BEBO10 I WOULD LIKE TO THANK YOU FOR THE GREAT EFFORT EXERTED.
DS12 What do you mean by that?
fmhp And you DS 12 what do you mean by your question?
mary11 lets thank everyone after we pass.
jfermin315 thanks mary
You need to log in first to add your comment.
I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt

Martin Rockenfeldt

My Own Flashcard

No flashcard found. Add a private flashcard for the subject.

Add

Actions