Quantitative Analysis Techniques Turn Standard Financial Statements Into Extraordinary Research Tools

ARLINGTON, Va., June 30 /PRNewswire-USNewswire/ -- Most financial statements contain the obvious, standard components: balance sheet, income statement, statement of retained earnings, and statement of cash flows.  However, financial statements also contain something equally important but less obvious: an opportunity to determine not only how much a company operates, but also how well it operates.  BNA's latest analysis, Financial Statement Analysis: Quantitative Techniques—Analyzing Liquidity, Profitability, and Asset Utilization, explains how to look beyond the bottom line of a financial statement and into an organization's operations.

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"Financial statements offer more about an organization than just revenues and expenses," says George Farrah, senior tax and accounting analyst with BNA.  "They provide insight into the entity's internal processes and efficiencies, particularly as they relate to specific operating assets, including receivables, inventories, and long-term fixed assets."

The authors, both financial professors from Franklin Marshall College, describe in detail three major techniques for applying quantitative analysis to financial statements: trend analysis, common-size analysis, and ratio analysis.  These techniques allow an organization to compare its current performance to past-years' performances (trend analysis), its current performance to other organizations and benchmarks (common-size analysis), and the performance of various items within the statement (ratio analysis).

The Portfolio explains who uses quantitative analysis and how these techniques help determine a company's liquidity or short-term solvency, profitability, and asset utilization.

Number 5165 in BNA's Accounting Policy and Practice Portfolio Series, Financial Statement Analysis: Quantitative Techniques also contains sample disclosures of financial statement information and quantitative analyses as well as numerous examples of questions that various types of financial statement users address during quantitative financial statement analyses.

Alan S. Glazer, who also co-authored BNA's Accounting for Museums Portfolio, number 5201, served as associate director of the Independence Standards Board's conceptual framework project and has written several articles on auditor independence and accounting ethics.

Glenn L. Stevens, who taught finance courses at Franklin & Marshall College from 1995 through his retirement in June 2007, spent a career in agricultural banking with the Farm Credit Bank of Baltimore prior to joining the college faculty.

About BNA Tax & Accounting

BNA Tax & Accounting is the foremost source of news, analysis, and practice tools for tax attorneys, estate planners, accountants, and corporate tax and financial accounting professionals. For more than 50 years, BNA Tax & Accounting has offered practitioners expert insights and guidance on every significant issue in tax planning and financial accounting. Written by practitioners for practitioners, BNA's award-winning Portfolios offer topic-driven, in-depth guidance on transactions designed to help tax professionals achieve new levels of excellence and client service. For more information on BNA's Federal Tax series of which this Portfolio is a part, go to http://www.bnatax.com/tm/apps_details.htm or call 800.372.1033.

SOURCE BNA Tax & Accounting

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