Top-Scoring BS2203 Financial Analysis – Advanced Revision Notes + Exam Pack**

📘 Top-Scoring BS2203 Financial
Analysis – Advanced Revision Notes +
Exam Pack
Now with “Earnings Quality & Manipulation – BS2203 Red Flag Analysis Notes”

For ALX University – Advanced Level (9/10)

Includes:

• Distinction-level summary notes
• Red flag analysis module
• 30-question advanced mock exam
• Detailed answers & hints for clarity




🔍 PART 1: HIGH-YIELD REVISION NOTES


📄 1. Core Financial Statements

Statement Function
Income Statement Profitability over time (revenue to net income)
Balance Sheet Assets, liabilities & equity snapshot
Cash Flow Tracks real-time liquidity
Statement (operating/investing/financing)
Statement of Equity Reconciliation of shareholders’ equity

, 📈 2. Ratio Analysis Overview

✅ Profitability Ratios

Metric Formula Use
Net Income /
Net Margin Overall profitability
Revenue
ROA Net Income / Assets Return on assets
Return to
ROE Net Income / Equity
shareholders



✅ Liquidity & Solvency Ratios

Metric Formula Use
Current Assets / Current
Current Ratio Short-term coverage
Liabilities
Conservative
Quick Ratio (CA – Inventory) / CL
liquidity
Debt-to-Equity Total Debt / Total Equity Leverage risk



✅ Efficiency Ratios

Metric Formula Use
Inventory Turnover COGS / Inventory Inventory efficiency
Receivables Sales / Accounts
Credit policy quality
Turnover Receivable
Asset Turnover Sales / Total Assets Use of resources



🧮 3. Valuation Techniques

Method Key Insight
DCF Present value of free cash flows
FCFn+1WACC−g\frac{FCF_{n+1}}{WAC
Terminal Value
C - g}