9/25/23, 9:18 PM
ACCT 370 discussion board 1
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A financial statement analysis can be defined as, “the process an individual goes through to
analyze a company’s various financial documents in order to make an informed decision about
that business” (Stobierski, 2019). Or it can be defined as, “the process of examining a company’s
performance in the context of its industry and economic environment in order to arrive at a
decision or recommendation” (CFA Institute, 2022). Financial statements dal with income
statement analysis, balance sheet and leverage ratios, and cash flow and profitability analysis
(Schmitt, 2022). According to the textbook, “without adequate information, investors cannot
properly judge the opportunities and risks of investment alternatives” (Revsine, 2020).
Essentially, a financial statement is used to inform someone on what decision to make. The main
people who use financial statements are, “shareholders and investors, managers and employees,
lenders and suppliers, customers, and government and regulatory agencies (Revsine, 2020).
Financial statement analysis is an important area of study as they provide lots of aspects that are
helpful to those who study them, like, “analytics, management report cards, early warning signs,
basis for prediction, and a measure for accountability” (Revsine, 2020). Financial statements are
