101 Concepts for the Level I Exam
Concept 38: Financial Statement Analysis Framework
The financial statement analysis framework consists of the following six steps:
- 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.
- Collect data.
- Collect data from financial statements and other information sources.
- Process the data.
- Make adjustments to financial statements.
- Create graphs, ratios, common-sizes statements, etc.
- Analyze and interpret the processed data.
- Develop and communicate conclusions.
- Follow up.
- Conduct periodic reviews to check if previous conclusions are still valid.