Financial Statement Analysis

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Attend this proactive webinar to learn financial statement analysis using a “five-step” model that includes liquidity, activity, leverage, operating performance, and cash flow analysis.

The cash flow analysis section will highlight traditional business EBITDA, personal (business owner), and global or combined cash flow analyses.

Case studies will be presented to illustrate the “five-step” model, including a review of Risk Management Association (RMA) industry comparisons and the results of the Moody's Lending Cloud software. Additionally, you will learn about the advanced topics of the Z-score (bankruptcy predictor) and sustainable growth models.

Your Benefits For Attending:
  • Learn a “five-step” financial statement analysis model covering liquidity, activity, leverage, operating performance, and cash flow analysis
  • Explore business, personal, and global cash flow applications
  • Understand industry comparisons and usage of specialized software
  • Review the Z-score bankruptcy predictor and sustainable growth models
Designed For:

CPAs, CFOs, controllers, auditors, financial analysts, and practitioners who provide accounting, tax, or consulting services to businesses.

  1. Introduction
  2. Author/Lecturer 00:01:59
  3. Who Uses Financial Statement Analysis? 00:03:26
  4. The “Five Step” Financial Statement Analysis Plan - Basics  00:5:50
  5. Accounting Basics 00:08:08
  6. The Five-Step Financial Statement Analysis Plan - Expanded - Liquidity 00:08:57
  7. The Five-Step Financial Statement Analysis Plan - Expanded -Activity 00:15:52
  8. The Five-Step Financial Statement Analysis Plan - Expanded -Leverage 00:20:24
  9. The Five-Step Financial Statement Analysis Plan - Operating Performance 00:23:47
  10. The Five-Step Financial Statement Analysis Plan - Cash Flow 00:27:47
  11. Personal Cash Flow (Business Owner/Guarantor) 00:33:17
  12. Global Cash Flow 00:35:38
  13. The Three Most Common Bank Loan Covenants 00:37:31
  14. Other Cash Flow Analysis Models 00:39:09
  15. Cash Basis Cash Flow 00:43:40
  16. Real Estate Cash Flow (Commercial Building) 00:48:26
  17. Other Issues in Financial Statement Analysis 00:54:16
  18. Sample Contractor Balance Sheet Example 01:00:18
  19. Sample Contractor Financial Analysis Example 01:02:01
  20. Sample Contractor Income Statement 01:02:35
  21. Sample Contractor Cash Flow Statement 01:04:04
  22. Sample Contractor Industry Classification 01:06:44
  23. Sample Contractor Financial Analysis 01:08:52
  24. How to Calculate a Z-Score 01:16:36
  25. Bankruptcy Predictor 01:19:23
  26. Sustainable Growth Rates (SGR) from a Financial Perspective 01:23:13
  27. Sustainable Growth Model 01:25:19
  28. Final Thoughts 01:29:50
  29. Presentation Closing 01:41:38
  • David L. Osburn, MBA

    David L. Osburn, MBA

    David is the founder and managing member of David L. Osburn & Associates LLC, a Las Vegas-based business training and contract CFO firm that provides seminar/keynote speeches for various groups including CPAs, bankers, attorneys, credit union employees, credit managers, trade groups, and busines [...]

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Aurora Training Advantage is offering continuing education points designed to recognize dedication to training and excellence in accounting.
  • Accounting (ACCG) 00:08:23
  • Accounts Payable (AP) 00:15:57, 00:19:13
  • Accounts Receivable (AR) 00:16:03, 00:19:08
  • Amortization 00:32:17
  • Asset 00:09:34, 00:13:51, 00:25:22
  • Balance Sheet (BS) 00:08:41, 00:58:04, 01:06:32
  • Bankruptcy 01:19:23
  • Cash Basis Cash Flow 00:37:47
  • Cash Flow (CF) 00:06:10, 00:08:04, 00:28:28, 00:35:41, 00:37:57, 00:39:16, 01:07:30
  • Cash Flow Statement 00:08:42
  • Debt Coverage Ratio (DCR) 00:30:37, 00:36:26, 00:47:24
  • Dividends 00:44:39
  • EBITDA 00:29:28, 00:35:50, 00:38:06
  • Equity 00:20:50, 00:23:19
  • Expenditure 00:44:36
  • Financial Statement 00:08:27, 00:10:24, 00:16:08, 00:27:07, 00:57:59, 01:19:53
  • Financial Statement Analysis 00:00:06, 00:03:32
  • Fixed Charge Coverage (FCCR) 00:40:05
  • Income Statement 00:08:40, 00:58:01, 01:02:05
  • Inventory 00:15:58, 00:16:50, 00:18:56
  • Liabilities  00:09:35, 00:20:57
  • Z-Score 01:16:42, 01:19:47

Accounting (ACCG): A systematic way of recording and reporting financial transactions for a business or organization.

Accounts Payable (AP): The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.

Accounts Receivable (AR): The amount of money owed by customers or clients to a business after goods or services have been delivered and/or used.

Amortization: An accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time. (investinganswers.com)

Asset: Property owned by a person or company, regarded as having value and available to meet debts, commitments or legacies.

Balance Sheet (BS): A financial report that summarizes a company's assets (what it owns), liabilities (what it owes) and owner or shareholder equity at a given time.

Bankruptcy: is a legal proceeding in which a debtor declares their inability to pay back their creditors.

Cash Basis Cash Flow: Cash accounting reflects business transactions on a company's financial statements when the cash flows into or out of the business.

Cash Flow (CF): The revenue or expense expected to be generated through business activities (sales, manufacturing, etc.) over a period of time.

Cash Flow Statement: In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

Debt Coverage Ratio (DCR): The debt service coverage ratio, also known as "debt coverage ratio", is the ratio of operating income available to debt servicing for interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's ability to produce enough cash to cover its debt payments.

Dividends: A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business and pay a proportion of the profit as a dividend to shareholders.

EBITDA: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization and is a metric used to evaluate a company's operating performance. It can be seen as a proxy for cash flow.

Equity: The total value of your business after you’ve subtracted what you owe [“liabilities”] from what you own [“assets”].

Expenditure: An expenditure is money spent on something. Expenditure is often used when people are talking about budgets.

Financial Statement: Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. ... A balance sheet or statement of financial position, reports on a company's assets, liabilities, and owners equity at a given point in time.

Financial Statement Analysis: Financial statement analysis is the process of evaluating a company's financial health and performance by reviewing its financial statements. It's used by a variety of stakeholders to make decisions about a company's financial status.

Fixed Charge Coverage (FCCR): The fixed-charge coverage ratio (FCCR) measures a firm's ability to cover its fixed charges, such as debt payments, interest expense, and equipment lease expense. It shows how well a company's earnings can cover its fixed expenses. Banks will often look at this ratio when evaluating whether to lend money to a business.

Income Statement: One of the three primary financial statements used to assess a company's performance and financial position (the two others being the balance sheet and the cash flow statement). The income statement summarizes the revenues and expenses generated by the company over the entire reporting period. (investinganswers.com)

Inventory: A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale. Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilization.

Liabilities (current and long-term) (CL, LTL): A company's debts or financial obligations incurred during business operations. Current liabilities (CL) are those debts that are payable within a year, such as a debt to suppliers. Long-term liabilities (LTL) are typically payable over a period of time greater than one year. An example of a long-term liability would be a multi-year mortgage for office space.

Z-Score: The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The formula may be used to predict the probability that a firm will go into bankruptcy within two years.

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Webinar Survey Overall Rating

This webinar received a total of 9 survey responses. Attendees have given an average rating of 4.4 stars out of a possible 5, reflecting the quality and value of the content presented.

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4.4 / 5
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4.3 Stars
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4.4 Stars
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4.6 Stars

Reviews From Webinar Survey

Our webinars are crafted to deliver exceptional value and insight to business professionals. Below, you'll find genuine feedback from attendees.

Isabel V.
March 4, 2025
4.8 / 5
Webinar Rating:
5.0 Stars
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4.5 Stars
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Very informative
Heidy E.
March 4, 2025
4.4 / 5
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4.0 Stars
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5.0 Stars
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The presenter was very good. Well spoken, clear, and provided examples.
Claudia M.
March 4, 2025
4.0 / 5
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4.0 Stars
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Very informative. The presenter was very knowledgeable of the topic.
Kendra W.
March 4, 2025
4.8 / 5
Webinar Rating:
4.7 Stars
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5.0 Stars
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No more comments from me.
Robin S.
March 4, 2025
4.6 / 5
Webinar Rating:
4.7 Stars
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4.5 Stars
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Mr Osborne provided many important insights which I have found helpful.
Edgardo C.
March 3, 2025
4.2 / 5
Webinar Rating:
4.3 Stars
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4.0 Stars
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The training was very informative and educational overall. In my personal opinion, I would have preferred the presenter write the notes that he was advising us to write. I think I could have followed him better if wrote the notes on his slides.
Janel N.
March 3, 2025
3.4 / 5
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3.0 Stars
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4.0 Stars
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Wow...It was a very HIGH level of information, definitely not a beginner's course. I will have to google most of the information and piece meal it together.
STACEY F.
March 3, 2025
5.0 / 5
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I thoroughly enjoyed the class today. Very useful.
Barbara N.
March 3, 2025
4.2 / 5
Webinar Rating:
4.0 Stars
Speaker Rating:
4.5 Stars
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I wish this was split between 2 sessions. Too much detail to digest

Frequently Asked Questions

The five-step financial statement analysis model is a structured framework used by CPAs, CFOs, analysts, and lenders to comprehensively evaluate a company's financial health and performance. The five steps are: (1) Liquidity analysis—assessing the company's ability to meet short-term obligations using ratios like the current ratio and quick ratio; (2) Activity analysis—evaluating how efficiently the company manages assets such as receivables, inventory, and payables using turnover ratios; (3) Leverage analysis—examining the company's debt structure and its ability to service that debt through ratios like debt-to-equity and interest coverage; (4) Operating performance analysis—measuring profitability and operational efficiency through metrics like gross margin, operating margin, and return on assets; and (5) Cash flow analysis—going beyond accrual earnings to assess actual cash generation through operating, investing, and financing activities, including EBITDA, personal cash flow, and global cash flow. Together, these five steps provide a 360-degree view of a company's financial position, performance, and risk profile.
EBITDA—Earnings Before Interest, Taxes, Depreciation, and Amortization—is one of the most widely used metrics in financial statement analysis because it approximates a company's operating cash-generating ability, stripped of financing decisions, tax jurisdictions, and non-cash accounting charges. In business lending, EBITDA is the foundation of debt service coverage calculations: lenders compare EBITDA to annual debt service obligations to assess whether the business generates sufficient cash to service its loans. In mergers and acquisitions, EBITDA multiples are commonly used to value businesses relative to industry peers. In the five-step analysis model, EBITDA is a core component of cash flow analysis, providing a starting point for traditional business cash flow before adjustments for capital expenditures, changes in working capital, and owner compensation. While EBITDA is a powerful indicator, analysts must understand its limitations—it can overstate liquidity in capital-intensive businesses or mask high working capital consumption—and always complement it with full cash flow statement analysis.
Global cash flow analysis is a comprehensive cash flow evaluation methodology that combines the cash flows from all related entities and individuals in a business ownership structure—including the business itself, its owner/guarantor's personal income, and any other related businesses or entities—to assess total debt repayment capacity. This approach is particularly important in business lending, where a lender must understand not just whether the business alone can service new debt, but whether the owner's complete financial picture supports the obligation. For example, if a business owner has personal real estate debt, alimony obligations, or other business interests, those obligations draw on the same cash pool that services business debt. Global cash flow captures these interdependencies by calculating an aggregated coverage ratio that reflects the complete picture. It is commonly used by commercial bankers, SBA lenders, and credit analysts when evaluating closely-held business loans. For CPAs and financial advisors advising business owner clients on financing, understanding global cash flow methodology is essential to setting realistic expectations about loan eligibility and debt capacity.
The Z-score is a quantitative financial model developed by Edward Altman in 1968 to predict the probability that a company will enter bankruptcy within two years. The model combines five financial ratios—working capital to total assets, retained earnings to total assets, EBIT to total assets, market value of equity to book value of total liabilities, and sales to total assets—into a single weighted composite score. Companies with Z-scores above a certain threshold (typically 2.99 for publicly traded manufacturing firms) are considered financially healthy; those below a lower threshold (typically 1.81) are in the distress zone with high bankruptcy risk; and those in between fall in a gray zone of uncertainty. While the original model was developed for publicly traded manufacturers, modified versions have been developed for private companies, non-manufacturing firms, and non-U.S. companies. For financial analysts, lenders, auditors, and CPAs evaluating going concern risk, the Z-score provides a useful early warning signal—particularly when combined with qualitative analysis of management, industry conditions, and the company's access to capital markets.
A sustainable growth model (SGM) is a financial framework that calculates the maximum rate at which a company can grow its revenues while maintaining its current financial structure—specifically, without requiring additional external equity financing. The sustainable growth rate is determined by the company's return on equity and the proportion of earnings retained (rather than distributed as dividends). If a company attempts to grow faster than its sustainable growth rate, it will need to either raise additional equity, increase its financial leverage, or improve its profit margins and asset efficiency. For financial analysts and lenders, the sustainable growth model is a powerful diagnostic tool: it reveals whether a company's growth ambitions are in line with its financial capacity, and flags situations where rapid growth may actually stress the business by depleting cash and increasing leverage. For CPAs and CFOs advising growing businesses, the sustainable growth model helps frame strategic conversations about optimal capital structure, dividend policy, and reinvestment rates—ensuring that growth strategy is anchored in financial reality.