7.Financil Statement Analysis..docVIP

七 FINANCIAL STATEMENT ANALYSIS FINANCIAL STATEMENTS BALANCE SHEET The basic balance sheet identity(p. 23 Ross), namely: Assets = Liabilities + Shareholder’s Equity Assets: what a firm owns. Liabilities: what a firm owes Shareholder’s equity: the difference between what a firm owns and what the firm owes. IMPORTANT ELEMENTS TO NOTE LIQUIDITY: DEBT vs EQUITY: MARKET VALUE vs BOOK VALUE: INCOME STATEMENT The INCOME STATEMENT reflects the flow of activity through the firm during any fiscal period. Financial analysts need to adapt the information contained in the income sta