9780470916629

International Financial Statement Analysis (CFA Institute Investment Series)

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  • ISBN13:

    9780470916629

  • ISBN10:

    0470916621

  • Edition: 2nd
  • Format: Hardcover
  • Copyright: 5/1/2012
  • Publisher: Wiley
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Summary

This book is designed to help investment professionals and students effectively evaluate financial statements in today's international and volatile markets, amid an uncertain global economic climate. The distinguished team of authors, along with experienced contributors, provides complete coverage to one of the most important issues in the field. International Financial Statement Analysis, 2nd edition, fully updated with new standards and methods for a post crisis world, covers the mechanics of the accounting process, which is the foundation for financial reporting; the differences and similarities in income statements, balance sheets, and cash flow statements around the world, examines the implications for securities valuation of any financial statement element or transaction, and shows how different financial statement analysis techniques can provide valuable clues into a company's operations and risk characteristics. The book also includes coverage of income tax accounting and reporting, the difficulty of measuring the value of employee compensation, and the impact of foreign exchange rates on the financial statements of multinational corporations.

Author Biography

Thomas R. Robinson, CFA, is Managing Director of the Education Division of CFA Institute where he leads and develops the teams responsible for producing and delivering educational content and examinations to candidates, members, and other investment professionals encompassing the CFA Program, CIPM Program, Lifelong Learning, Private Wealth, Publications, and Conferences.

Elaine Henry, CFA, is an Assistant Professor of Accounting at the University of Miami where she teaches courses in accounting, financial statement analysis, and valuation. After working in corporate finance at Lehman Brothers, strategy consulting at McKinsey & Company, and corporate banking at Citibank, she obtained a PhD from Rutgers University where she majored in accounting and minored in finance.

Wendy L. Pirie, CFA, is Director, Curriculum Projects, in the Education Division of CFA Institute. Prior to joining CFA Institute in 2008, she taught finance, accounting, statistics, taxation, business law, and marketing for over twenty years at both large and small public and private universities, religious colleges, and military academies. Her work has been published in the Journal of Financial Research and the Journal of Economics and Finance. She holds a PhD from Queen's University in Kingston, Ontario, and MBAs from the University of Toronto and the University of Calgary. Pirie is also coauthor of Investments: Principles of Portfolio and Equity Analysis (Wiley).

Michael A. Broihahn, CFA, is an Associate Professor of Accounting and the Director of Graduate Programs at Barry University in Miami, Florida. His teaching and research interests encompass financial accounting, auditing, and professional ethics. He currently serves CFA Institute in a number of different capacities.

Table of Contents

Foreword
Preface
Acknowledgments
Introduction
Financial Statement Analysis: An Introduction
Learning Outcomes
Introduction
Scope of Financial Statement Analysis
Major Financial Statements and Other Information Sources
Financial Statement Analysis Framework
Summary
Problems
Financial Reporting Mechanics
Learning Outcomes
Introduction
The Classification of Business Activities
Accounts and Financial Statements
The Accounting Process
Accruals and Valuation Adjustments
Accounting Systems
Using Financial Statements in Security Analysis
Summary
A Debit/Credit Accounting System
Problems
Financial Reporting Standards
Learning Outcomes
Introduction
The Objective of Financial Reporting
Standard-Setting Bodies and Regulatory Authorities
Convergence of Global Financial Reporting Standards
The International Financial Reporting Standards Framework
Effective Financial Reporting
Comparison of IFRS with Alternative Reporting Systems
Monitoring Developments in Financial Reporting Standards
Summary
Problems
Understanding Income Statements
Learning Outcomes
Introduction
Components and Format of the Income Statement
Revenue Recognition
Expense Recognition
Non-Recurring Items and Non-Operating Items
Earnings per Share
Analysis of the Income Statement
Comprehensive Income
Summary
Problems
Understanding Balance Sheets
Learning Outcomes
Introduction
Components and Format of the Balance Sheet
Current Assets and Current Liabilities
Non-Current Assets
Non-Current Liabilities
Equity
Analysis of the Balance Sheet
Summary
Problems
Understanding Cash Flow Statements
Learning Outcomes
Introduction
Components and Format of the Cash Flow Statement
The Cash Flow Statement: Linkages and Preparation
Cash Flow Statement Analysis
Summary
References
Problems
Financial Analysis Techniques
Learning Outcomes
Introduction
The Financial Analysis Process
Analytical Tools and Techniques
Common Ratios Used in Financial Analysis
Equity Analysis
Credit Analysis
Business and Geographic Segments
Model Building and Forecasting
Summary
References
Problems
Financial Statement Analysis: Applications
Learning Outcomes
Introduction
Application: Evaluating Past Financial Performance
Application: Projecting Future Financial Performance
Application: Assessing Credit Risk
Application: Screening for Potential Equity Investments
Analyst Adjustments to Reported Financials
Summary
References
Problems
Inventories
Learning Outcomes
Introduction
Cost of Inventories
Inventory Valuation Methods
The LIFO Method
Inventory Method Changes
Inventory Adjustments
Evaluation of Inventory Management
Summary
Problems
Long-Lived Assets
Learning Outcomes
Introduction
Acquisition of Long-Lived Assets
Depreciation and Amortisation of Long-Lived Assets
The Revaluation Model
Impairment of Assets
Derecognition
Presentation and Disclosures
Investment Property
Leasing
Summary
Problems
Income Taxes
Learning Outcomes
Introduction
Differences between Accounting Profit and Taxable Income
Determining the Tax Base of Assets and Liabilities
Temporary and Permanent Differences between Taxable and Accounting Profit
Unused Tax Losses and Tax Credits
Recognition and Measurement of Current and Deferred Tax
Presentation and Disclosure
Comparison of IFRS and U.S. GAAP
Summary
Problems
Non-Current (Long-Term) Liabilities
Learning Outcomes
Introduction
Bonds Payable
Leases
Introduction to Pensions and Other Post-Employment Benefits
Evaluating Solvency: Leverage and Coverage Ratios
Summary
Problems
Employee Compensation: Post-Employment and Share-Based
Learning Outcomes
Introduction
Pensions and Other Post-Employment Benefits
Share-Based Compensation
Summary
References
Problems
Intercorporate Investments
Learning Outcomes
Introduction
Basic Corporate Investment Categories
Investments in Financial Assets
Investments in Associates
Joint Ventures
Business Combinations
Variable Interest and Special Purpose Entities
Summary
Problems
Multinational Operations
Learning Outcomes
Introduction
Foreign Currency Transactions
Translation of Foreign Currency Financial Statements
Summary
Problems
Evaluating Financial Reporting Quality
Learning Outcomes
Introduction
Discretion in Accounting Systems
Financial Reporting Quality: Definitions, Issues, and Aggregate Measures
A Framework for Identifying Low-Quality Financial Reporting
The Implications of Fair Value Reporting for Financial Reporting Quality: A Brief Discussion
Summary
Problems
Integration of Financial Statement Analysis Techniques
Learning Outcomes
Introduction
Case Study 1: Long-term equity investment
Case Study 2: Off-Balance Sheet Leverage From Operating Leases
Case Study 3: Anticipating Effects Of Changes in Accounting Standards
Conclusion
Problems
Glossary
References
About the Authors
About the CFA Program
Index
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