1. Financial Statements What are financial statements? Who uses it creditors, shareholders,mergers, takeovers, valuing security, future forecast.

2. Types of Financial Statements Income Statement period of time Balance Sheet double entry, A = L+E Cash Flow Statement reconciliation ofcash, operating, investing and financing Statement of Changes in Stockholders equity 3. Importance of Footnotes - contingency liabilities MD&A not audited, before Financial Statements,outlook of the company, liquidity etc. External Audit Report reasonable assurance that no errors. It cofootnotes also. Unqualified, Qualified, Adverse orDisclaimer of opinion. Are estimates and assumptions correct? Under GAAP Opinion on Internal Control Mechanismto minimize fraud. Proxy Statements What are we voting for? Statement of Comprehensive Income Not compulsory 4. Financial Statement Analysis Purpose of Analysis Collect Data Process Data Ratio analysis etc. Interpret Process Data Analyze the results of processing data Develop and communicate conclusions and recommendations Follow Up