Financial Statement Analysis

Employees are asking for a raise. A key supplier wants a commitment. A customer needs reassurance. And your board just reminded you that “cash flow” isn’t a suggestion—it’s survival.

In moments like these, one thing becomes very clear: you need to understand your numbers.

No matter your role—managing a team, running a business, launching a startup, or leading a department—financial statements are packed with the insights you need to make confident, data-driven decisions.

Sure, you could ask an accountant to translate the numbers. But here’s the catch: your accountant might not fully understand the quirks of your industry. And let’s be honest—sometimes you need answers faster than you can schedule a meeting.

The good news? You don’t have to be an accountant to understand financial statements. You just need someone who can teach them in a clear, practical, “no jargon allowed” way.

I’m Dr. Eric Knight—CPA, professor, consultant, and your soon-to-be guide through the world of financial statements. With over 20 years of experience helping business leaders make sense of their numbers, I’ve designed this course to strip away the unnecessary complexity and focus on what actually matters.

You’ll learn:

• What each major financial statement really tells you

• How to analyze company performance using ratios and understand why those ratios matter

• How to spot the story behind the numbers using real company data

• How managers can use (or, let’s say… creatively interpret) accounting rules—and how not to be fooled by it

We’ll explore real-world examples, case studies, and “wait… they can do that?” scenarios. You’ll check your understanding with quizzes and discussion questions that help you apply what you’re learning directly to your industry.

By the end, you won’t just read financial statements—you’ll decode them.

Because no matter your field, understanding financials is a superpower. And yes, you can absolutely learn it.

Lesson Highlights

Why We Analyze Financial Statements
Financial statements may start with accountants, but they definitely don’t end there. They’re used by managers, lenders, investors, and anyone responsible for making decisions that move a business forward. In this lesson, you’ll learn who relies on financial data, why they need it, and how proper analysis turns raw numbers into real strategy.

GAAP: The Rules
Every sport has rules—and business is no different. To understand financial statements, you need to understand GAAP, the rulebook that tells companies how to report their performance. We’ll cover where GAAP comes from, who enforces it, and how management’s incentives shape what gets reported.

Timing Is Everything
Profit should be straightforward… but it isn’t. In this lesson, we’ll uncover how timing, revenue recognition, and accounting choices can shift reported income. You’ll learn why two companies can look identical but report very different profits—and what that means for your decisions.

Earnings Management
Financial statements should reflect reality. But because GAAP allows some wiggle room, managers sometimes give those numbers a little “polish.” In this lesson, we’ll explore how earnings management works, why it happens, and what red flags to watch for so you’re never misled by overly optimistic reporting.

Balance Sheet Part 1

Let's take a closer look at the financial statements. In this lesson we'll begin with an overview of the two key statements used in business. The balance sheet and income statement. As important as knowing what is included on the statements, is understanding how the value of each element was derived. This lesson begins with a closer look at current assets.

Balance Sheet Part 2

We continue to unravel the mysteries of the balance sheet in our lesson. One of the most misunderstood accounting concepts is depreciation. We'll discuss how property and equipment is valued first. Then we discuss what depreciation really is and what it is not. By the end of the lesson, we'll understand book value.

Balance Sheet Part 3

Our journey through the balance sheet continues with intangibles and onward to the liabilities. Who knew the balance sheet could provide so much information on a business? The lesson ends with an overview of corporate bonds.

Statement of Cash Flows

We finally finish up with the balance sheet and move on to the Statement of Cash Flows. Cash is the most important current asset a business has. Without cash the business cannot pay employees or vendors. So how that cash is derived gives the financial statement analyst important information. This lesson takes us through the Statement of Cash Flows while explaining the implications of cash to the organization.

Time Series

The objective of the financial statements are to provide external users with a window into the company. But do we understand what we see in that window? Let's begin understanding the financial statements by using time series analysis. This lesson starts explaining how to analyze a business using the financial statements.

Ratios

Ratios provide analysts with tools to develop deeper understanding of the financial statements. Ratios can help us to determine risk and get a feel for management's performance. In this lesson we learn ratios that can evaluate profitability, liquidity and solvency of an organization.

Applying Ratios

In a previous lessee we began our journey towards understanding ratios. In this lesson we take the next step. We use those ratios on real companies that actually exist. We'll analyze real numbers from Lowe's, Home Depot, Pepsi, Coca Cola, and Monster to see how using ratios can tell us a story about the operations of management.

Valuation

What is a business worth? Is it the buildings and equipment the company has? Is it the value of the employees? Is it the earnings power? Determining value is not as easy as one might thing. In this lesson we'll dive into this idea of valuation.

Credit

A common option used in business is to obtain funds to buy the necessary resources by taking a loan. The creditor needs to understand the business to ascertain the risk of not being paid back. This lesson examines the various methods that creditors approach determining a risk. We begin with an overview of the various types of loans used in business in general.

Contracts

Contracts are used extensively in management. Human resources or supply chain managers for example. HR may need to make a decision on giving employees raises? Supply chain managers need to determine if their supplier is in good financial shape? So, the financial statements are often a big part of the contracting function of business. In this lesson we will consider how financial statements can shape our business contracts.

Executive Compensation

Managers are people. People tend to look out for their own best interest. But what about the company stockholders? How can we structure management compensation in a manner that leads to a win-win situation between management and the stockholders? Our lesson will consider the long- and short-term considerations used to develop management compensation.

Leases

Why discuss leases in a course on financial analysis? Well, it seems leases are a tool that management might use to influence the performance of the financials without increasing actual efficiency. Because we are learning to analyze and understand the financial statements, we need to be aware of the implications of using leases for that purpose.

Owners' Equity

Another option a manager has to get funding for the business, is to sell stock. Stock is a share of a business. Stockholders are owners. There are multiple types of stock. Stocks may have features associated with the shares. Let's learn more about the equity side of balance sheet!

Earnings Per Share

The Earnings Per Share ratio is used extensively by stock analysts. It is the only ratio included with the financial statements. However, earnings per share can be impacted by changes to the number of shares. In our lesson we see how that can occur and how we adjust the Earnings Per Share to include potential harmful impact of changes to the number of shares.

So, before you go...

Whether you’re a manager, entrepreneur, or business professional, understanding financial statements gives you a competitive edge. This course empowers you to interpret the numbers, spot red flags, evaluate performance, and make informed decisions—without needing to be an accountant. By the end, you’ll not only read financial statements—you’ll use them to lead smarter, ask better questions, and drive results. Enroll now and take control of the financial story behind your business.