Financial Statement Analysis and Security Valuation : With S and P Package

by Penman, Stephen H.

• ISBN13: 9780072508093
• ISBN10: 0072508094
• Edition: 1st
• Format: Hardcover
• Copyright: 2001-05-04
• Publisher: McGraw-Hill/Irwin

Summary

This text focuses on the output of financial statements, not the input. As such, the book asks what financial statements tell you, not how they are prepared. The idea is to get students to see accounting "working." The particular use of financial statements that the book focuses on is valuation. The text takes the approach that the best way to accurately value a firm is to look at the future earnings of the firm. The main pretext of the book is that financial statement analysis and valuation analysis are inextricably entwined: valuation is an exercise in financial statement analysis. Financial statement analysis is directed by the need to get information for valuation. Accordingly, the book brings finance and accounting concepts together. The book stresses concepts, but the idea is to show how to move from concepts to practice.

Table of Contents

1. Introduction to Investing and Valuation

2. Introduction to the Financial Statements

Part I: Investment Returns, Valuation Models, and the Financial Statements

3. Investment Returns

4. Valuation Models and Forecasting Dividends and Cash Flows

5. Accounting Measurement and Valuation from Earnings Forecasts

6. An Accrual Accounting Valuation Model

Part II: The Analysis of Financial Statements

7. Business Activities and Financial Statements

8. The Analysis of the Statement of Shareholders' Equity

9. The Analysis of the Balance Sheet and Income Statement

10. The Analysis of the Cash Flow Statement

11. The Analysis of Profitability

12. The Analysis of Growth and Sustainable Earnings

Part III: Forecasting and Valuation Analysis

13. Valuation of Operations and the Analysis of Price-to-Book Ratios

14. Simple Forecasting and Simple Valuation

15. Full-Information Forecasting, Valuation, and Business Strategy Analysis

16. The Analysis of Price-Earnings Ratios

Part IV: Accounting Analysis and Valuation

17. Creating accounting Value and Economic Value

18. The Quality of Current Accounting

19. The Quality of Forecasted Accounting

Part V: The Analysis of Risk

20. The Analysis of Equity Risk and the Cost of Capital

21. The Analysis of Credit Risk

Appendix: A Summary of Formulas

Index