Financial Statement Analysis
Financial Statement Analysis is one of the heaviest-weighted topic areas on the Finance Certification 1 exam, and for good reason: the ability to read, interpret, and critically evaluate financial statements is the foundation of virtually every investment decision. In a DeFi context, these same analytical skills translate directly to evaluating protocol financials, treasury management, on-chain metrics, and the sustainability of tokenomic models. Whether you are assessing a traditional 10-K filing or parsing a Dune Analytics dashboard for a lending protocol, the intellectual framework is the same.
Topics
- Introduction to Financial Statement Analysis — The five-step analytical framework and stakeholder perspectives
- Analyzing Income Statements — Revenue recognition, expense matching, EPS, and common-size analysis
- Analyzing Balance Sheets — Intangibles, goodwill, financial instruments, and balance sheet ratios
- Analyzing Statements of Cash Flows I — Direct and indirect methods, IFRS vs. GAAP classification
- Analyzing Statements of Cash Flows II — FCFF, FCFE, coverage ratios, and life-cycle analysis
- Analysis of Inventories — FIFO, LIFO, LCNRV, and inventory disclosure analysis
- Analysis of Long-Term Assets — Intangible asset reporting, impairment, and PP&E disclosures
- Topics in Long-Term Liabilities and Equity — Leases, pensions, stock-based compensation, and debt disclosures
How These Topics Connect
The FSA module is designed as a cumulative progression. Topic 1 establishes the framework, then Topics 2—5 walk through each primary financial statement in turn. Topics 6—8 drill into specific balance sheet line items that carry outsized analytical weight. Mastery here feeds directly into Equity Investments (valuation), Fixed Income (credit analysis), and Corporate Issuers (capital structure decisions).