Diagnosing the Financial Health of a Business

This course shows how financial reports provide a wealth of information into the performance of a business, and how they can be used specifically to identify early warning signs of potential future problems.

We will see that a profitable business may not necessarily be performing well or taking the right steps to build for its future. Just as a doctor conducts a diagnosis of a patient and recommends a course of treatment, we will use simple and yet powerful tools to analyse a business and identify where and how things can be improved.

What will I learn?

• How to evaluate the performance of a business with reference to its financial reports.
• How to conduct financial analysis by integrating information across its balance sheet, income statement and cash flow statement (as opposed to viewing data in isolation).
• How to identify early warning signs of potential financial difficulties in a business and thus be forward-looking in your approach.
• How to assess risks in a business by reference to its financial reports.
• How to identify the assumptions and estimates that are made by managers in constructing their financial reports and assess the implications for interpreting the performance of a business.
• How to measure and interpret the sustainable growth rate of a business and identify implications for its future heath.
• How to distinguish between the income statement and the statement of comprehensive income of a business.
• How to measure the operating cash cycle of a business and assess the implications for the funding needs of the business.
• How to determine if a firm is generating appropriate returns on its assets and for its owners.

This course requires approximately 2 - 4 hours of study per week, but can vary depending on the student. This includes watching videos, and taking quizzes and assessments.

If you pass this course you'll receive a Certificate of Achievement. While this certificate isn't a formal qualification or credit, you can use it to demonstrate your interest in learning about this area to potential employers or educational institutions.

Where could this lead me?

If you're wondering what your future could look like in this area, here are some potential careers you could head towards.

• Management
• Finance
• Accounting
• Investment analysis

MODULE 1: THE BALANCE SHEET     MODULE 2: INCOME STATEMENT     MODULE 3: STATEMENT OF CASH FLOWS     MODULE 4: ASSESSING FINANCIAL PERFORMANCE