Chapter 3 - the balance sheet and financial disclosures
(Lecture)
Tuesday, January 24, 2023
10:39 PM
The Balance Sheet - snapshot of financial position
Managements discussion and analysis - MD&A
Operations
Liquidity
Capital resources
Capital One - (MD&A) (10K)
Proxy statement - executive compensation / stock options disclosure
 Agenda items, voting items , audited financial statements last
Auditors report - examine financial statements
 Unqualified auditors report
o Opinion, financial statements are presented in conformity
with US GAAP
o Gathering evidence to attest the accuracy of the
reported financial statements
 Unqualified with an explanatory paragraph
Qualified opinion
Adverse opinion
Disclaimer
Default risk
Operational risk
Financial statement analysis - formulate predictions
Common methods include
Comparative financial statements - fianncial statements
are presented for the preceding year
Horizontal analysis - each item is represented as a
percentage of a that same item of another year