Exploring profitability diversity through financial statement analysis

Abstract

The present work intends to serve Financial Statement Analysis courses’ improving students’ learning process, applying real-life examples in assessing and evaluating the ability to use and interpret fundamental data. Common-sized financial statements and other financial ratios for Portuguese and Brazilian companies, operating in three different industries, are provided. Common-sized, used for identifying the industries, allow comparisons between companies that differ in size and whose reports are presented in different currencies. Additional ratios allow a deeper understanding on Return on Equity’s drivers. Case discussion questions include industries’ structure and ROE breakdown analysis, using a variation of the DuPont Model.