Książki

Corporate Financial Reporting Analysis combines comprehensive coverage and a rigorous approach to modern financial reporting with a readable and accessible style. Merging traditional principles of corporate finance and accepted reporting practices with current models enable the reader to develop essential interpretation and analysis skills, while the emphasis on real-world practicality and methodology provides seamless coverage of both GAAP and IFRS requirements for enhanced global relevance.

Two decades of classroom testing among INSEAD MBA students has honed this text to provide the clearest, most comprehensive model for financial statement interpretation and analysis; a concise, logically organized pedagogical framework includes problems, discussion questions, and real-world case studies that illustrate applications and current practices, and in-depth examination of key topics clarifies complex concepts and builds professional intuition. With insightful coverage of revenue recognition, inventory accounting, receivables, long-term assets, M&A, income taxes, and other principle topics, this book provides both education and ongoing reference for MBA students.

Corporate Financial Reporting Analysis 4th Edition

About the Authors iv





1 An Introduction to Financial Statements 1





The Three Principal Financial Statements, 2





Other Items in the Annual Report, 9





Generally Accepted Accounting Principles: The Rules of the Game, 12





The Barriers to Understanding Financial Statements, 12





Key Lessons from the Chapter, 14





Key Terms and Concepts from the Chapter, 15





Questions, 15





Problems: 15





1.1 Balance Sheet Terminology, 15





1.2 Understanding Balance Sheet Relationships, 16





1.3 Interpreting an Auditor's Opinion, 16





Case Studies: 17





1-1 Apple: An Introduction to Financial Statement Analysis, 17





1-2 Pepsico: Communicating Financial Performance, 20





Notes, 23





2 The Balance Sheet and Income Statement 24





A Further Look at the Balance Sheet, 24





Assets, 25





Liabilities, 27





Shareholders' Equity, 28





A Further Look at the Income Statement, 29





Other Things You Should Know About the Balance Sheet and the Income Statement, 30





Key Lessons from the Chapter, 32





Key Terms and Concepts from the Chapter, 33





Questions, 33





Appendix 2.1 The Mechanics of Financial Accounting: The Double-Entry System, 33





Key Terms and Concepts from the Appendix, 42





Key Lessons from the Appendix, 42





Problem: 42





2.1 Preparing a Balance Sheet and an Income Statement, 42





Case Study: 43





2-1 JanMar Fabrics: Preparing the Balance Sheet and Income Statement, 43





3 A Brief Overview of GAAP and IFRS: The Framework for Financial Accounting 45





The Core Principles of GAAP and IFRS, 45





The Key Qualitative Characteristics of Financial Information, 47





The Key Assumptions of Financial Information, 48





Modifying Conventions, 48





The Future of Financial Reporting, 49





Key Lessons from the Chapter, 50





Key Terms and Concepts from the Chapter, 51





Questions, 51





4 Revenue Recognition 52





Introduction, 52





The Five-Step Revenue Recognition Model, 52





Revenue-Recognition Controversies, 65





Key Lessons from the Chapter, 68





Key Terms and Concepts from the Chapter, 68





Questions, 68





Problems: 68





4.1 Revenue Recognition at and After Time of Sale, 68





4.2 Recognizing Revenue Over Time, 69





4.3 Journal Entries for Gift Cards, 69





4.4 Recognizing Revenue Over Time, 69





4.5 Revenue Recognition in Different Types of Businesses, 69





Case Studies: 70





4-1 Kiwi Builders, Ltd., 70





4-2 Revenue Recognition at Starbucks Corporation, 70





4-3 Network Associates (McAfee): A Case of "Channel Stuffing", 77





Notes, 79





5 The Statement of Cash Flows 80





Introduction, 80





The Reporting of Cash Flows from Operations, 80





Preparing the Statement of Cash Flows, 82





IFRS and the Statement of Cash Flows, 90





Analyzing the Statement of Cash Flows, 90





Key Lessons from the Chapter, 94





Key Terms and Concepts from the Chapter, 94





Questions, 95





Problems: 95





5.1 Interpreting the Statement of Cash Flows, 95





5.2 Adjustments on the Statement of Cash Flows, 95





5.3 Preparing and Analyzing a Statement of Cash Flows, 97





5.4 Interpreting the Role of Accounts Payable in Cash Flow from Operations, 97





5.5 Manipulating the Statement of Cash Flows, 98





5.6 Analysis of the Statement of Cash Flows, 98





5.7 Cash Flow and Credit Risk, 99





5.8 Preparing and Interpreting the Statement of Cash Flows, 100





Case Studies: 100





5-1 Blockbuster Inc.: Movie Rentals, Profits, and Operating Cash, 100





5-2 Monahan Manufacturing: Preparing and Interpreting a Statement of Cash Flows, 107





5-3 A Tale of Three Companies: Cash Flows at Sun Microsystems,Wal-Mart, and Merck, 108





5-4 Inditex: Analyzing the Statement of Cash Flows, 110





Notes, 114





6 Financial Statement Analysis 115





Introduction, 115





Business and Industry Analysis, 116





Accounting Analysis, 119





Financial Analysis, 119





Dupont Analysis, 122





ROE and the Analysis of Financial Risk, 129





Key Lessons from the Chapter, 136





Key Terms and Concepts from the Chapter, 137





Questions, 137





Appendix 6.1 An Industry and Competitive Analysis of Taiwan Semiconductor Manufacturing Company (TSMC), 137





Appendix 6.2 Summary of Financial Statement Ratios, 139





Problems: 141





6.1 Financial Statement Detective Exercise, 141





6.2 Effects of Transactions on Selected Balance Sheet Figures, 143





6.3 Calculating and Interpreting PP&E Turnover Ratios, 144





6.4 Financial Statement Detective Exercise in the Pharmaceutical Industry, 144





6.5 Comprehensive Financial Ratio Analysis, 146





6.6 Profitability Analysis for The Home Depot, 146





6.7 Comparative Analysis of Receivables and Inventories, 147





Case Studies: 147





6-1 Profitability Analysis and WalMart's Suppliers, 147





6-2 LVMH and Warnaco: Strategy and Financial Statement Analysis, 148





Notes, 153





7 Business Valuation and Financial Statement Analysis 154





Valuation Principles, 154





Valuation: From Theory to Practice, 155





The Economic Profit Approach to Valuation, 156





A Case Study in Valuation: TSMC, 158





A Brief Word on Growth Rates, 162





Key Lessons from the Chapter, 165





Key Terms and Concepts from the Chapter, 165





Questions, 165





Problems: 165





7.1 Estimating the Value of The Home Depot, 165





7.2 Explaining Differences in P/E Ratios, 166





7.3 Explaining Differences in P/E Ratios, 166





Case Study: 166





7-1 Valuation Based on Discounted Cash Flows: The Case of Vardon Golf Ltd., 166





Notes, 167





8 Accounting for Receivables and Bad Debts 168





Introduction, 168





Estimating Bad Debts, 168





Writing off Accounts, 169





The Direct Method: An Alternative Approach, 169





What Happens When Written-off Accounts are Later Collected?, 170





The "Aging" of Accounts Receivable, 170





Sales Returns and Allowances, 171





Analyzing Receivables, 172





Key Lessons from the Chapter, 173





Key Terms and Concepts from the Chapter, 173





Questions, 173





Appendix 8.1 Accounting for Loan Loss Reserves, 173





Problems: 175





8.1 Bad Debts on Loans Receivable, 175





8.2 Determining Bad Debt Expense from an Aging Schedule, 175





8.3 Analyzing Receivables and the Allowance for Doubtful Accounts, 175





8.4 Provisions for Credit Losses, 181





Case Studies: 182





8-1 Receivables and Bad Debts at Toyota, 182





8-2 Johnson Perry, 182





8-3 Citigroup Inc.: Accounting for Loan Loss Reserves, 185





Notes, 191





9 Accounting for Inventory 192





Introduction, 192





Inventory Valuation: LIFO, FIFO, and the Rest, 195





The Lower of Cost or Net Realizable Value Rule, 196





The Cost-Flow Assumptions: An Example, 196





Inventory Cost-Flow Assumptions: A Summary, 199





Key Lessons from the Chapter, 200





Key Terms and Concepts from the Chapter, 200





Questions, 200





Problems: 201





9.1 Calculating Inventory Under the FIFO and Average-Cost Methods, 201





9.2 Inventories and Ratio Analysis, 201





9.3 Correcting Inventory Errors, 201





9.4 The Lower of Cost or Net Realizable Value Rule, 201





9.5 Calculating Cost of Goods Sold Under FIFO and Specific Identification, 201





Case Studies: 202





9-1 LIFO Accounting at Tamar Chemicals, 202





9-2 Deere and CNH Global: Performance Effects of Inventory Accounting Choice, 202





Notes, 208





10 Accounting for Property, Plant, and Equipment 209





Introduction, 209





Initial Recognition of PP&E, 210





Subsequent Expenditures: Repair or Improvement?, 211





Accounting for Depreciation, 211





Changes in Depreciation Estimates or Methods, 213





Asset Impairment, 214





Fair Value vs. Historical Cost, 215





Divestitures and Asset Sales, 216





Intangible Assets, 216





Key Lessons from the Chapter, 218





Key Terms and Concepts from the Chapter, 218





Questions, 218





Problems: 219





10.1 Comparing the Effects of Depreciation Choice on Financial Ratios, 219





10.2 Analyzing Depreciation on PP&E, 219





10.3 Calculating and Analyzing Amortization Expense, 220





10.4 Calculating Depreciation Expense, 220





10.5 Effects of Changes in Estimates on Depreciation Expense, 221





10.6 Interpreting Disclosures for Property, Plant and Equipment, 221





10.7 Capitalizing or Expensing Costs, 224





10.8 Journal Entries for Depreciation and Amortization Expense, 224





11 Leases and Off-Balance-Sheet Debt 225





Introduction, 225





Leasing Accounting Before 2018: Capital vs. Operating Leases, 225





Accounting for Capital Leases, 226





Accounting for Operating Leases, 227





Lease Accounting: An Example, 227





Interpreting Lease Disclosures, 229





Off-Balance-Sheet Debt, 230





Recent Developments in Lease Accounting, 231





Key Lessons from the Chapter, 233





Key Terms and Concepts from the Chapter, 233





Questions, 233





Problem: 233





11.1 The Financial Reporting Effects of Selling Receivables, 233





Case Studies: 234





11-1 Lease Accounting at Metro AG, 234





11-2 Pennzoil-Quaker State and the Sale of Receivables, 235





11-3 Executory Contracts, 235





Note, 235





12 Accounting for Bonds 236





Introduction, 236





Accounting for Bond Issuance, 237





Accounting for Bonds Sold at Par, 238





Accounting for Bonds Sold at a Premium, 238





Bond Redemption Before Maturity, 242





Accounting for Bonds Issued at a Discount, 242





Zero-Coupon Bonds, 244





Key Lessons from the Chapter, 246





Key Terms and Concepts from the Chapter, 246





Questions, 247





Problems: 247





12.1 Journal Entries and Balance Sheet Presentation for Bonds, 247





12.2 Amortization of Bond Discount and Premium, 247





12.3 Journal Entries for Bond Issuance and Subsequent Interest Payments, 247





13 Provisions and Contingencies 248





Introduction, 248





Defining Provisions, 249





Measuring the Provision, 249





Disclosure of Provisions: Interpreting the Notes, 250





Contingent Liabilities, 251





Contingent Assets, 254





Key Lessons from the Chapter, 254





Key Terms and Concepts from the Chapter, 254





Questions, 254





Problems: 255





13.1 Accounting for Warranties, 255





13.2 Analyzing and Interpreting Disclosures on the Provision for Warranties, 255





Case Studies: 255





13-1 Accounting for Contingent Assets: The Case of Cardinal Health, 255





13-2 Firestone Tire and Rubber Company (A), 257





13-3 Firestone Tire and Rubber Company (B), 259





Notes, 259





14 Accounting for Pensions 260





Introduction, 260





A Brief Word on Defined Contribution Plans, 260





Unfunded Defined Benefit Plans, 261





Funded Defined Benefit Plans, 261





American Airlines: An Example of Defined Benefit Plan Disclosure, 267





Key Lessons from the Chapter, 269





Key Terms and Concepts from the Chapter, 270





Questions, 270





Case Study: 270





14-1 Comprehensive Pension Review Problem: Cathay Pacific, 270





Note, 273





15 Accounting for Income Tax 274





Introduction, 274





Temporary and Permanent Differences, 275





Deferred Taxes and the Balance Sheet Approach, 276





The Balance Sheet Approach: An Example, 277





Interpreting Income Tax Disclosures: The Case of Intel Corporation, 279





Why Deferred Income Tax is Important, 284





Key Lessons from the Chapter, 285





Key Terms and Concepts from the Chapter, 285





Questions, 285





Problems: 285





15.1 Calculating Temporary and Permanent Differences, 285





15.2 Interpreting Income Tax Disclosures, 286





15.3 Deferred Income Taxes and the Statement of Cash Flows, 286





Case Study: 288





15-1 Deferred Tax Assets and the Valuation Allowance: The Case of Ford Motor Company, 288





Notes, 292





16 Accounting for Shareholders' Equity 293





Introduction, 293





Shareholders' Equity: An Introduction, 293





More on Contributed Capital, 297





Accounting for Stock Transactions, 298





Dividends on Common Stock, 301





Stock Dividends and Stock Splits, 303





Accumulated Other Comprehensive Income, 305





Convertible Bonds, 305





The Statement of Shareholders' Equity, 307





Key Lessons from the Chapter, 308





Key Terms and Concepts from the Chapter, 308





Questions, 308





Problems: 309





16.1 Effect of Selected Transactions on Net Income and Shareholders' Equity, 309





16.2 Share Buybacks, 309





16.3 The Financial Statement Effects of Dividend Payments and Buybacks, 309





16.4 The Accounting and Economic Consequences of Stock Splits and Stock Dividends, 310





Case Studies: 310





16-1 Stock Options, Stock Dividends, and Stock Splits, 310





16-2 Share Buybacks: Economic Rationale and Financial Reporting Effects, 311





16-3 The Accounting for Convertible Bonds, 311





16-4 Why Do Companies Buy Back Their Own Shares? The Case of the Scomi Group, 311





Notes, 312





17 Investments 313





Introduction, 313





Investments at Microsoft, 313





Debt and Passive Equity Investments, 314





The Fair Value Hierarchy, 316





Equity Method, 317





A Further Look at Microsoft's Investments, 319





Consolidation, 321





Key Lessons from the Chapter, 323





Key Terms and Concepts from the Chapter, 324





Questions, 324





Problems: 324





17.1 Classification of Long-Term Investments, 324





17.2 The Effect of Transaction Cost on Marketable Securities and Investments, 325





17.3 Journal Entries and Analysis Under the Equity Method, 325





17.4 Review Problem, 325





17.5 Mark-to-Market Accounting for Trading Securities, 326





17.6 The Equity Method and the Statement of Cash Flows, 326





Case Studies: 327





17-1 Stora Enso: Accounting for Investments, 327





17-2 Coca-Cola and Coca-Cola Enterprises: The Equity





Method in Practice, 328





Notes, 328





18 Accounting for Mergers and Acquisitions 329





Introduction, 329





Purchase Price/Cost of Acquisition, 329





Contingent Consideration, 330





Recognition and Measurement of Identifiable Assets, 330





Subsequent Adjustments to Acquired Assets and Liabilities, 334





Goodwill Impairment, 334





Noncontrolling Interest, 335





Key Lessons from the Chapter, 336





Key Terms and Concepts from the Chapter, 336





Questions, 336





Problems: 336





18.1 Journal Entry for an Acquisition, 336





18.2 Analysis of an Acquisition, 337





18.3 Accounting for an Acquisition: Carrefour and BLC (China), 337





18.4 Business Combinations at Tesco, 338





18.5 AB InBev acquires SABMiller, 338





Appendix: Tables for Present Value and Future Value Factors 342





Index 351