International Financial Statement Analysis

ISBN-13: 9781119628057 / Angielski / Twarda / 2020 / 1008 str.

Thomas R. Robinson

Spis treści

Preface xvAcknowledgments xviiAbout the CFA Institute Investment Series xixChapter 1 Introduction to Financial Statement Analysis 1Learning Outcomes 11. Introduction 12. Roles of Financial Reporting and Financial Statement Analysis 23. Primary Financial Statements and Other Information Sources 83.1. Financial Statements and Supplementary Information 93.2. Other Sources of Information 284. Financial Statement Analysis Framework 284.1. Articulate the Purpose and Context of Analysis 304.2. Collect Data 304.3. Process Data 314.4. Analyze/Interpret the Processed Data 314.5. Develop and Communicate Conclusions/Recommendations 324.6. Follow-Up 325. Summary 32References 34Practice Problems 34Chapter 2 Financial Reporting Standards 37Learning Outcomes 371. Introduction 372. The Objective of Financial Reporting 383. Standard-Setting Bodies and Regulatory Authorities 393.1. Accounting Standards Boards 393.2. Regulatory Authorities 414. The International Financial Reporting Standards Framework 464.1. Qualitative Characteristics of Financial Reports 464.2. Constraints on Financial Reports 484.3. The Elements of Financial Statements 494.4. General Requirements for Financial Statements 505. Comparison of IFRS with Alternative Reporting Systems 536. Monitoring Developments in Financial Reporting Standards 556.1. New Products or Types of Transactions 556.2. Evolving Standards and the Role of CFA Institute 557. Summary 57Practice Problems 58Chapter 3 Understanding Income Statements 61Learning Outcomes 611. Introduction 622. Components and Format of the Income Statement 623. Revenue Recognition 683.1. General Principles 693.2. Accounting Standards for Revenue Recognition 704. Expense Recognition 734.1. General Principles 744.2. Issues in Expense Recognition 784.3. Implications for Financial Analysis 835. Non-Recurring Items and Non-Operating Items 845.1. Discontinued Operations 845.2. Unusual or Infrequent Items 855.3. Changes in Accounting Policies 865.4. Non-Operating Items 896. Earnings per Share 906.1. Simple versus Complex Capital Structure 906.2. Basic EPS 916.3. Diluted EPS 926.4. Changes in EPS 987. Analysis of the Income Statement 997.1. Common-Size Analysis of the Income Statement 997.2. Income Statement Ratios 1018. Comprehensive Income 1039. Summary 106Practice Problems 108Chapter 4 Understanding Balance Sheets 113Learning Outcomes 1131. Introduction 1132. Components and Format of the Balance Sheet 1142.1. Balance Sheet Components 1152.2. Current and Non-Current Classification 1162.3. Liquidity-Based Presentation 1173. Current Assets and Current Liabilities 1183.1. Current Assets 1183.2. Current Liabilities 1234. Non-Current Assets 1274.1. Property, Plant, and Equipment 1284.2. Investment Property 1294.3. Intangible Assets 1294.4. Goodwill 1324.5. Financial Assets 1354.6. Deferred Tax Assets 1385. Non-Current Liabilities 1395.1. Long-term Financial Liabilities 1405.2. Deferred Tax Liabilities 1406. Equity 1416.1. Components of Equity 1416.2. Statement of Changes in Equity 1447. Analysis of the Balance Sheet 1457.1. Common-Size Analysis of the Balance Sheet 1467.2. Balance Sheet Ratios 1538. Summary 156Practice Problems 158Chapter 5 Understanding Cash Flow Statements 163Learning Outcomes 1631. Introduction 1632. Components and Format of the Cash Flow Statement 1642.1. Classification of Cash Flows and Non-Cash Activities 1652.2. A Summary of Differences between IFRS and US GAAP 1672.3. Direct and Indirect Methods for Reporting Cash Flow from Operating Activities 1683. The Cash Flow Statement: Linkages and Preparation 1773.1. Linkages of the Cash Flow Statement with the Income Statement and Balance Sheet 1783.2. Steps in Preparing the Cash Flow Statement 1793.3. Conversion of Cash Flows from the Indirect to the Direct Method 1914. Cash Flow Statement Analysis 1924.1. Evaluation of the Sources and Uses of Cash 1934.2. Common-Size Analysis of the Statement of Cash Flows 1974.3. Free Cash Flow to the Firm and Free Cash Flow to Equity 2024.4. Cash Flow Ratios 2045. Summary 205Practice Problems 206Chapter 6 Financial Analysis Techniques 213Learning Outcomes 2131. Introduction 2132. The Financial Analysis Process 2142.1. The Objectives of the Financial Analysis Process 2152.2. Distinguishing between Computations and Analysis 2163. Analytical Tools and Techniques 2183.1. Ratios 2213.2. Common-Size Analysis 2263.3. The Use of Graphs as an Analytical Tool 2323.4. Regression Analysis 2334. Common Ratios Used in Financial Analysis 2344.1. Interpretation and Context 2344.2. Activity Ratios 2354.3. Liquidity Ratios 2414.4. Solvency Ratios 2464.5. Profitability Ratios 2504.6. Integrated Financial Ratio Analysis 2545. Equity Analysis 2625.1. Valuation Ratios 2625.2. Industry-Specific Ratios 2655.3. Historical Research on Ratios in Equity Analysis 2676. Credit Analysis 2686.1. The Credit Rating Process 2686.2. Historical Research on Ratios in Credit Analysis 2697. Business and Geographic Segments 2707.1. Segment Reporting Requirements 2707.2. Segment Ratios 2718. Model Building and Forecasting 2749. Summary 275References 275Practice Problems 276Chapter 7 Inventories 283Learning Outcomes 2831. Introduction 2832. Cost of Inventories 2853. Inventory Valuation Methods 2863.1. Specific Identification 2873.2. First-In, First-Out (FIFO) 2873.3. Weighted Average Cost 2873.4. Last-In, First-Out (LIFO) 2883.5. Calculation of Cost of Sales, Gross Profit, and Ending Inventory 2883.6. Periodic versus Perpetual Inventory Systems 2903.7. Comparison of Inventory Valuation Methods 2934. The LIFO Method 2954.1. LIFO Reserve 2954.2. LIFO Liquidations 2965. Inventory Method Changes 3036. Inventory Adjustments 3047. Evaluation of Inventory Management 3117.1. Presentation and Disclosure 3127.2. Inventory Ratios 3127.3. Financial Analysis Illustrations 3138. Summary 323Practice Problems 325Chapter 8 Long-Lived Assets 339Learning Outcomes 3391. Introduction 3402. Acquisition of Long-Lived Assets 3402.1. Property, Plant, and Equipment 3412.2. Intangible Assets 3432.3. Capitalizing versus Expensing: Impact on Financial Statements and Ratios 3482.4. Capitalization of Interest Costs 3532.5. Capitalization of Internal Development Costs 3553. Depreciation and Amortization of Long-Lived Assets 3593.1. Depreciation Methods and Calculation of Depreciation Expense 3603.2. Amortization Methods and Calculation of Amortization Expense 3684. The Revaluation Model 3695. Impairment of Assets 3735.1. Impairment of Property, Plant, and Equipment 3735.2. Impairment of Intangible Assets with a Finite Life 3755.3. Impairment of Intangibles with Indefinite Lives 3765.4. Impairment of Long-Lived Assets Held for Sale 3765.5. Reversals of Impairments of Long-Lived Assets 3766. Derecognition 3766.1. Sale of Long-Lived Assets 3776.2. Long-Lived Assets Disposed of Other than by a Sale 3787. Presentation and Disclosures 3798. Investment Property 3899. Summary 393Practice Problems 395Chapter 9 Income Taxes 407Learning Outcomes 4071. Introduction 4082. Differences between Accounting Profit and Taxable Income 4082.1. Current Tax Assets and Liabilities 4092.2. Deferred Tax Assets and Liabilities 4103. Determining the Tax Base of Assets and Liabilities 4133.1. Determining the Tax Base of an Asset 4143.2. Determining the Tax Base of a Liability 4153.3. Changes in Income Tax Rates 4174. Temporary and Permanent Differences Between Taxable and Accounting Profit 4184.1. Taxable Temporary Differences 4194.2. Deductible Temporary Differences 4194.3. Examples of Taxable and Deductible Temporary Differences 4204.4. Temporary Differences at Initial Recognition of Assets and Liabilities 4224.5. Business Combinations and Deferred Taxes 4234.6. Investments in Subsidiaries, Branches, Associates, and Interests in Joint Ventures 4235. Unused Tax Losses and Tax Credits 4236. Recognition and Measurement of Current and Deferred Tax 4246.1. Recognition of a Valuation Allowance 4256.2. Recognition of Current and Deferred Tax Charged Directly to Equity 4257. Presentation and Disclosure 4288. Comparison of IFRS and US GAAP 4339. Summary 436Practice Problems 437Chapter 10 Non-Current (Long-Term) Liabilities 443Learning Outcomes 4431. Introduction 4432. Bonds Payable 4442.1. Accounting for Bond Issuance 4442.2. Accounting for Bond Amortization, Interest Expense, and Interest Payments 4482.3. Current Market Rates and Fair Value Reporting Option 4532.4. Derecognition of Debt 4572.5. Debt Covenants 4592.6. Presentation and Disclosure of Long-Term Debt 4613. Leases 4643.1. Lessee accounting 4653.2. Lessor accounting 4664. Introduction to Pensions and Other Post- Employment Benefits 4685. Evaluating Solvency: Leverage and Coverage Ratios 4726. Summary 475Practice Problems 477Chapter 11 Financial Reporting Quality 483Learning Outcomes 4831. Introduction 4842. Conceptual Overview 4842.1. GAAP, Decision-Useful, Sustainable, and Adequate Returns 4862.2. GAAP, Decision-Useful, but Sustainable? 4862.3. Biased Accounting Choices 4872.4. Departures from GAAP 4962.5. Differentiate between Conservative and Aggressive Accounting 4983. Context for Assessing Financial Reporting Quality 5013.1. Motivations 5013.2. Conditions Conducive to Issuing Low-Quality Financial Reports 5013.3. Mechanisms That Discipline Financial Reporting Quality 5024. Detection of Financial Reporting Quality Issues 5104.1. Presentation Choices 5104.2. Accounting Choices and Estimates 5164.3. Warning Signs 5335. Summary 538References 539Practice Problems 540Chapter 12 Applications of Financial Statement Analysis 545Learning Outcomes 5451. Introduction 5452. Application: Evaluating Past Financial Performance 5463. Application: Projecting Future Financial Performance 5503.1. Projecting Performance: An Input to Market-Based Valuation 5513.2. Projecting Multiple-Period Performance 5554. Application: Assessing Credit Risk 5595. Application: Screening for Potential Equity Investments 5616. Analyst Adjustments to Reported Financials 5656.1. A Framework for Analyst Adjustments 5656.2. Analyst Adjustments Related to Investments 5656.3. Analyst Adjustments Related to Inventory 5666.4. Analyst Adjustments Related to Property, Plant, and Equipment 5696.5. Analyst Adjustments Related to Goodwill 5717. Summary 573References 574Practice Problems 574Chapter 13 Intercorporate Investments 577Learning Outcomes 5771. Introduction 5772. Basic Corporate Investment Categories 5783. Investments in Financial Assets: IFRS 9 5793.1. Classification and Measurement 5803.2. Reclassification of Investments 5824. Investments in Associates and Joint Ventures 5834.1. Equity Method of Accounting: Basic Principles 5844.2. Investment Costs That Exceed the Book Value of the Investee 5874.3. Amortization of Excess Purchase Price 5884.4 Fair Value Option 5904.5. Impairment 5914.6. Transactions with Associates 5914.7. Disclosure 5944.8. Issues for Analysts 5955. Business Combinations 5955.1. Acquisition Method 5975.2. Impact of the Acquisition Method on Financial Statements, Post-Acquisition 5995.3. Th e Consolidation Process 6015.4. Financial Statement Presentation Subsequent to the Business Combination 6075.5. Variable Interest and Special Purpose Entities 6105.6. Additional Issues in Business Combinations That Impair Comparability 6136. Summary 614Practice Problems 615Chapter 14 Employee Compensation: Post-Employment and Share-Based 627Learning Outcomes 6271. Introduction 6272. Pensions and Other Post-Employment Benefits 6282.1. Types of Post-Employment Benefit Plans 6282.2. Measuring a Defined Benefit Pension Plan's Obligations 6312.3. Financial Statement Reporting of Pension Plans and Other Post-Employment Benefits 6322.4. Disclosures of Pension and Other Post-Employment Benefits 6453. Share-Based Compensation 6563.1. Stock Grants 6583.2. Stock Options 6593.3. Other Types of Share-Based Compensation 6624. Summary 662Reference 663Practice Problems 663Chapter 15 Multinational Operations 673Learning Outcomes 6731. Introduction 6742. Foreign Currency Transactions 6752.1. Foreign Currency Transaction Exposure to Foreign Exchange Risk 6762.2. Analytical Issues 6802.3. Disclosures Related to Foreign Currency Transaction Gains and Losses 6823. Translation of Foreign Currency Financial Statements 6883.1. Translation Conceptual Issues 6883.2. Translation Methods 6933.3. Illustration of Translation Methods (Excluding Hyperinflationary Economies) 7013.4. Translation Analytical Issues 7043.5. Translation when a Foreign Subsidiary Operates in a Hyperinflationary Economy 7163.6. Companies Use Both Translation Methods at the Same Time 7203.7. Disclosures Related to Translation Methods 7214. Multinational Operations and a Company's Effective Tax Rate 7275. Additional Disclosures on the Effects of Foreign Currency 7305.1. Disclosures Related to Sales Growth 7305.2. Disclosures Related to Major Sources of Foreign Exchange Risk 7336. Summary 734Practice Problems 736Chapter 16 Analysis of Financial Institutions 749Learning Outcomes 7491. Introduction 7492. What Makes Financial Institutions Different? 7502.1. Global Organizations 7532.2. Individual Jurisdictions' Regulatory Authorities 7553. Analyzing a Bank 7563.1. The CAMELS Approach 7563.2. Other Factors Relevant to Analysis of a Bank 7733.3. An Illustration of the CAMELS Approach to Analysis of a Bank 7774. Analyzing an Insurance Company 8004.1. Property and Casualty Insurance Companies 8004.2. Life and Health Insurance Companies 8095. Summary 816Practice Problems 817Chapter 17 Evaluating Quality of Financial Reports 825Learning Outcomes 8251. Introduction 8252. Quality of Financial Reports 8272.1. Conceptual Framework for Assessing the Quality of Financial Reports 8272.2. Potential Problems that Affect the Quality of Financial Reports 8293. Evaluating the Quality of Financial Reports 8403.1. General Steps to Evaluate the Quality of Financial Reports 8413.2. Quantitative Tools to Assess the Likelihood of Misreporting 8424. Earnings Quality 8454.1. Indicators of Earnings Quality 8454.2. Evaluating the Earnings Quality of a Company (Cases) 8554.3. Bankruptcy Prediction Models 8665. Cash Flow Quality 8675.1. Indicators of Cash Flow Quality 8675.2. Evaluating Cash Flow Quality 8686. Balance Sheet Quality 8767. Sources of Information about Risk 8807.1. Limited Usefulness of Auditor's Opinion as a Source of Information about Risk 8807.2. Risk-Related Disclosures in the Notes 8847.3. Management Commentary (Management Discussion and Analysis, or MD&A) 8887.4. Other Required Disclosures 8917.5. Financial Press as a Source of Information about Risk 8928. Summary 892References 894Practice Problems 896Chapter 18 Integration of Financial Statement Analysis Techniques 901Learning Outcomes 9011. Introduction 9012. Case Study: Long-Term Equity Investment 9032.1. Phase 1: Define a Purpose for the Analysis 9032.2. Phase 2: Collect Input Data 9032.3. Phase 3: Process Data and Phase 4: Analyze/Interpret the Processed Data 9042.4. Phase 5: Develop and Communicate Conclusions and Recommendations (e.g., with an Analysis Report) 9322.5. Phase 6: Follow-up 9333. Summary 933Practice Problems 933Glossary 937About the Editors 947About the CFA Program 949Index 951