Analyzing Financial Statements is intended to be a practical introduction to

financial analysis from the viewpoint of the commercial loan officer.

One of the keyskills of an effective loan officer is the ability to analyze a

company s fina/lcial statements so as to achieve an understanding of the

company s past performance and then to use that analysis to make

sound predictions about the company s future performance and credit-

worthiness.

Chapters ! and 2 serve as introductory chapters defining financial

analysis and explaining its purposes and limitations. Chapter 1 provides

an overview of the orderly sequence of steps involved in financial

analysis. Chapter 2 emphasizes the importance of thoroughly under-

standing a company and its operating environment and describes the

various cyclical patterns of businesses which provide a conceptual

framework for financial analvsis.