1. Sources and uses of cash. We discussed how to identify the ways in which businesses obtain and use cash, and we described how to trace the flow of cash through the business over the course of the year. We briefly looked at the statement of cash flows.
2. Standardized financial statements. We explained that differences in size make it difficult to compare financial statements, and we discussed how to form common-size and common–base period statements to make comparisons easier.
3. Ratio analysis. Evaluating ratios of accounting numbers is another way of comparing financial statement information. We therefore defined and discussed a number of the most commonly reported and used financial ratios. We also discussed the famous Du Pont identity as a way of analyzing financial performance.
4. Using financial statements. We described how to establish benchmarks for comparison purposes and discussed some of the types of information that are available. We then examined some of the potential problems that can arise.

After you have studied this chapter, we hope you will have some perspective on the uses and abuses of financial statements. You should also find that your vocabulary of business and financial terms has grown substantially.