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Learn to Evaluate and Analyze Financial Statements


An organization's financial statements provide snapshots of its well-being, and the ability to evaluate and analyze these statements is among the skills acquired in an accounting-focused Master of Business Administration program.

In addition to learning about leadership, ethics, effective communication and teamwork, MBA students also acquire key analytical skills that enable them to assess a company's financial statements. Investopedia defines this type of analysis as "the process of reviewing and evaluating a company's financial statements, thereby gaining an understanding of the financial health of the company and enabling more effective decision making."

Improve Analytical Skills

Through its coursework, in particular its Business Valuation and Financial Statements class, Southern Oregon University's online MBA in Accounting program affords students opportunities to enhance what they already know and to acquire additional skills.

The value of financial statements lies in insights gained from an analysis and evaluation of the numbers they contain. Through coursework in the SOU program, students learn how to glean crucial information in financial documents, ranging from balance sheets to cash flow and comprehensive income (profit and loss) statements.

A balance sheet provides an overview of an organization's financial standing and indicates its assets, liabilities and equity at a specific point in time. Income (or profit and loss) statements show revenue and expenses over a period of time, providing details about the organization's gross, operating, and net profits and margins. An organization's cash flow statement reflects monies moving in and out of its accounts as a result of its operating, investing and financing activities.

Utilizing several techniques, including horizontal, vertical, and ratio analyses, students learn how to pull together valuable information relating to an organization's operations. According to Invensis Global Outsourcing Services, there are six reasons why analytical skills are needed in assessing financial statements:

  • Attainment of transparency.
  • Evaluation of tax liability.
  • Mitigation of errors.
  • Trust-building.
  • Payment cycle improvement.
  • Better overall decision-making.

Career Outlook

The Graduate Management Admission Council's 2017 Corporate Recruiters Survey Report found a growing demand for MBA in Accounting graduates. The survey took in responses from 950-plus employers representing more than 600 companies located around the world, with the majority of those companies looking to expand their operations. GMAC notes that the analytical ability of MBA grads who specialized in accounting is prized by companies across the spectrum: "From Fortune Global 100 companies to start-ups and family-owned business, more companies will target recent business school graduates to help strategize for the future and implement company plans."

Sectors identified in the report included consulting, energy/utilities, finance/accounting, healthcare/pharmaceutical, technology, manufacturing, nonprofit/government, and products/services, with the majority of new hires slated for mid-level positions.

The informed decision-making that results from the analysis of financial statements allows its beneficiaries to operate an organization at its most efficient best while also providing the foundation for strategic planning. 

By acquiring the skills to dive deep into corporate financial reports and their footnotes, students are able to evaluate an organization's performance, both past and present, with a predictive eye. And research is showing that employers value these skills. 

Learn more about Southern Oregon University's online MBA program with a Concentration in Accounting


Sources:

Invensis: Importance of Accurate Financial Statements for a Business

Investopedia: Financial Statement Analysis

GMAC: 2017 Corporate Recruiters Survey Report


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