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FINANCIAL MARKET COURSES

Analysis of the Income Statement

Users of financial statements attach great importance to the income statement (or P&L) statement. It's easy to see why; the income statement shows a company's revenue, its expenditure incurred in earning that revenue, and, finally, its net income or profit. A company's net income is an important indicator of its long-term prosperity and ability to create shareholder value.

 

Investors, analysts, and other interested parties should not focus on income exclusively, however. Depending on accounting policies employed, the effect on reported income in the financial statements can be significant. This course introduces the various elements of the income statement, enabling you to look behind the key figures. With this knowledge, you should be able to make an informed judgment on a company’s performance.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify the key elements of the income statement

    Calculate key ratios associated with the income statement

  • COURSE OUTLINE

    Topic 1: Elements of the Income Statement

    Sales Revenue

    Cost of Sales

    Gross Profit

    Operating Expenses

    Interest Paid

    Exceptional and extraordinary gains

    Prior Period Adjustments

    Pre-Tax Income

    Taxes

    Net Income

    Dividends

    Net Income Available to Shareholders

    Topic 2: Ratio Analysis

    Profitability Ratios

    o Gross Profit Margin

    o Net Profit Margin

    o Return on Capital Employed

    Activity Ratios

    o Inventory Turnover Ratio

    o Accounts Receivable Collection Period

    o Accounts Payable Period

    o Asset Turnover Ratio

    Investors Ratios

    o Earnings per Share

    o Price Earnings Ratio

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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