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101 Concepts for the Level I Exam

Concept 38: Financial Statement Analysis Framework

The financial statement analysis framework consists of the following six steps:

  1. Define the purpose and context of the analysis.
    • Define the context of the analysis based on your function, client inputs and organizational guidelines.
    • Determine the time frame and the resources available for the task.
  2. Collect data.
    • Collect data from financial statements and other information sources.
  3. Process the data.
    • Make adjustments to financial statements.
    • Create graphs, ratios, common-sizes statements, etc.
  4. Analyze and interpret the processed data.
  5. Develop and communicate conclusions.
  6. Follow up.
    • Conduct periodic reviews to check if previous conclusions are still valid.

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