CCP Intermediate Level
Financial Statements Analysis for Credit Managers glossary
Every term this guide defines, A to Z, each with the chapter that teaches it. Open it when a word in a question is unfamiliar, and test yourself on it in the last week: cover the definition and say it in one sentence.
11 terms from the free first chapter
A
- Adverse opinion
Misstatements are material and pervasive: the statements as a whole do not give a true and fair view. A lender should not rely on them.
Taught in Financial statement analysis for lenders
D
- Disclaimer of opinion
The auditor could not obtain enough evidence to form an opinion at all, and the possible effects are material and pervasive. In effect there are no audited figures.
Taught in Financial statement analysis for lenders
E
- Emphasis of matter
A paragraph drawing attention to something properly disclosed in the statements that is fundamental to understanding them. The opinion is not modified, but the matter deserves the analyst's attention.
Taught in Financial statement analysis for lenders
M
- Material uncertainty related to going concern
A paragraph stating that events or conditions cast significant doubt on the entity's ability to continue as a going concern. For a lender this is one of the most important sentences in the whole annual report.
Taught in Financial statement analysis for lenders
N
- Notes to the financial statements
Accounting policies, judgements and estimates, borrowings and their security, contingent liabilities, commitments, related-party transactions and events after the reporting date. Much of what a lender needs is only in the notes.
Taught in Financial statement analysis for lenders
Q
- Qualified opinion
The statements are fairly presented except for a specific matter that is material but not pervasive, or on which the auditor could not obtain enough evidence. The analyst must find out what the matter is and adjust for it.
Taught in Financial statement analysis for lenders
S
- Statement of cash flows
Where cash came from and went, by operating, investing and financing activities: the closest the statements come to repayment capacity.
Taught in Financial statement analysis for lenders
- Statement of changes in equity
Movements in share capital, reserves and retained earnings, including dividends paid and new shares issued: it shows whether owners are putting money in or taking it out.
Taught in Financial statement analysis for lenders
- Statement of financial position
What the entity owns and owes at the reporting date: the basis for liquidity, leverage and net worth.
Taught in Financial statement analysis for lenders
- Statement of profit or loss and other comprehensive income
Performance over the period: revenue, costs, margins and the earnings available to service debt.
Taught in Financial statement analysis for lenders
U
- Unmodified opinion
The auditor concludes that the statements give a true and fair view in accordance with the framework. The usual and expected outcome.
Taught in Financial statement analysis for lenders
The full glossary adds every term from the other 11 chapters, A to Z, each with the chapter that teaches it.