Corporate Finance 101: Financial Statement Analysis & Ratios

A zoom-in, zoom-out, connect-the-dots guide to understanding financial statements, and analysing companies

What you'll learn
Interpret financial statements - the Balance Sheet, Income Statement and Statement of Cash Flows
Parse SEC filings such as the 10K and 10Q to understand the business model of any company entirely from its investor filings
Calculate ratios in all major categories: liquidity, leverage, turnover, profitability and valuation
Apply Dupont's Identity to see whether a company's stock returns are driven by operational efficiency, asset efficiency or leverage
Calculate the sustainable rate of growth at which a company can grow without external financing
Requirements
This course assumes no prior knowledge of accounting or finance
The investor relations sections of Facebook, Twitter and LinkedIn will be used, but the course will discuss how to access and use these public sites
Description
This is a zoom-in, zoom-out, connect-the-dots tour of Financial Statement Analysis
Let's parse that
'connect the dots': Financial Statement Analysis gets a bad rep because its hard to connect the nitty-gritty of the financial statements to the company as a whole. This course makes a serious effort to do exactly that.'zoom in': Getting the details is very important in corporate finance - a small typo, or a minor misunderstanding can cost a company big. This course gets the details right where they are important. 'zoom out': Details are important, but not always. You probably don't care about the nitty gritty of accounting for contingent liabilities if you don't know what accounts payable are. This course knows when to switch to the big picture.
What's Covered:
Corporate Finance Introduced: partnerships, proprietorships and the corporationThe Agency Problem: How auditors, the board of directors and the capital markets regulator play a roleFinancial Statements: Balance Sheet, Income Statement, Statement of Comprehensive Income and Cash Flow Statement at exactly the right level of detailRatios: Five important types of ratios: liquidity ratios, leverage ratios, turnover ratios, profitability ratios and valuation ratiosDupont's Identity: Return-on-equity can be decomposed into 3 elements: profits, asset-leanness and leverage.External Financing Needed (EFN) and the Sustainable Rate of Growth: How fast can a company grow if it chooses to forgo external funding? Every startup should know this, really.Common Accounting Shenanigans: The playbook of financial statement cheats has been studied by auditors and regulators - learn from history so you are not condemned to repeat it.
Case Studies:
Understanding a company entirely from its investor filings
Facebook: Fast-growing and profitable, this is the dream stock right now.LinkedIn: Versatile, but struggling to break through - the jury seems out on LinkedInTwitter: Bleeding red and slowing growth - Twitter seems to be in trouble.

Overview

Section 1: You, Us & This Course

Lecture 1 You, Us & This Course

Section 2: The Enterprise

Lecture 2 Sole Proprietorship

Lecture 3 Partnership

Lecture 4 The Corporation

Lecture 5 Public and Private

Lecture 6 Agency Problems and Corporate Governance

Section 3: The Balance Sheet

Lecture 7 The Balance Sheet

Lecture 8 Assets

Lecture 9 Liabilities

Lecture 10 Shareholder's Equity

Lecture 11 Balance Sheet Case Studies: Facebook, Twitter, LinkedIn

Section 4: The Income Statement

Lecture 12 Income Statement

Lecture 13 The Net Income Waterfall

Lecture 14 Statement of Comprehensive Income

Lecture 15 Income Statement Case Studies

Section 5: The Statement of Cash Flows

Lecture 16 Statement of Cash Flows

Lecture 17 The Direct and Indirect Methods

Lecture 18 Cash Flow Statement Case Studies

Lecture 19 Working with Cash Flows - I

Lecture 20 Working with Cash Flows - II

Section 6: Ratios

Lecture 21 Ratios Introduced

Lecture 22 Liquidity, Leverage and Efficiency

Lecture 23 Profitability and Valuation

Section 7: Some Advanced Topics

Lecture 24 Dupont's Identity

Lecture 25 External Financing & The Sustainable Rate of Growth

Lecture 26 Common Accounting Shenanigans

Section 8: Case Studies

Lecture 27 Facebook

Lecture 28 LinkedIn

Lecture 29 Twitter

Section 9: EPS

Lecture 30 Introducing EPS

Lecture 31 Basic EPS

Lecture 32 Diluted EPS

Lecture 33 Diluted EPS (continued)

Section 10: Inventories

Lecture 34 Inventory Valuation

Lecture 35 Understanding Inventories

Section 11: More on Assets

Lecture 36 Fixed Assets

Lecture 37 Capitalisation Decisions

Lecture 38 Depreciation Methodologies

Lecture 39 Implications of Depreciation

Section 12: Leases

Lecture 40 Leases Introduced

Lecture 41 NPV of Lease Payments

Lecture 42 Operating Leases Vs Financial Leases

Lecture 43 Leases Example

Yep! Business majors and aspiring MBAs,Yep! CFA Level I candidates,Yep! Entrepreneurs looking to understand basic corporate finance,Nope! Accountants - you'll find this course too basic