Scribd Logo
Upload

Welcome to Scribd!

  • 192 views

    Ch11 4th Ed Financial Accounting Narayanaswamy

    Uploaded by

    Deepti Agarwal
    This document discusses techniques for analyzing financial statements including horizontal analysis, trend analysis, vertical analysis, and ratio analysis. It covers various ratios to analyze profitability, liquidity, solvency, and other aspects of financial statements. The document also discusses earnings quality, understanding annual reports, and factors that influence disclosure policies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Ch11 4th Ed Financial Accounting Narayanaswamy

    Uploaded by

    Deepti Agarwal
    192 views18 pages
    This document discusses techniques for analyzing financial statements including horizontal analysis, trend analysis, vertical analysis, and ratio analysis. It covers various ratios to analyze profitability, liquidity, solvency, and other aspects of financial statements. The document also discusses earnings quality, understanding annual reports, and factors that influence disclosure policies.

    Original Description:

    bbcnzxc b

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses techniques for analyzing financial statements including horizontal analysis, trend analysis, vertical analysis, and ratio analysis. It covers various ratios to analyze profitability, liquidity, solvency, and other aspects of financial statements. The document also discusses earnings quality, understanding annual reports, and factors that influence disclosure policies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    192 views18 pages

    Ch11 4th Ed Financial Accounting Narayanaswamy

    Uploaded by

    Deepti Agarwal
    This document discusses techniques for analyzing financial statements including horizontal analysis, trend analysis, vertical analysis, and ratio analysis. It covers various ratios to analyze profitability, liquidity, solvency, and other aspects of financial statements. The document also discusses earnings quality, understanding annual reports, and factors that influence disclosure policies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 18

    Financial Accounting:

    A Managerial Perspective
    Fourth Edition
    Prepared by
    R. Narayanaswamy
    Indian Institute of Management Bangalore

    28 June 2013

    PHI Learning Private Limited New Delhi

    Chapter 11
    Financial Statement Analysis

    28 June 2013

    PHI Learning Private Limited New Delhi

    Objectives of Financial Statement


    Analysis
    
    

    What is financial statement analysis?


    Evaluating past performance and
    current position
    
    

    Predicting future performance


    

    28 June 2013

    Monitoring management
    Past as a guide to the future
    Forecasting

    PHI Learning Private Limited New Delhi

    Sources of Information
    

    Company reports
    
    
    
    

    
    
    

    28 June 2013

    Directors report, MD&A


    Financial statements
    Schedules and notes
    Auditors report

    Stock exchanges
    Business periodicals and television
    Information services
    PHI Learning Private Limited New Delhi

    Standards of Comparison
    
    
    
    

    28 June 2013

    Rule-of-thumb indicators
    Past performance
    Internal standards
    Industry standards

    PHI Learning Private Limited New Delhi

    Earnings Quality
    
    
    
    
    
    
    

    28 June 2013

    What is earnings quality?


    Why is earnings quality important?
    Choice of accounting policies
    Prior period errors
    Discontinued operations
    Changes in accounting policies
    Non-operating and non-recurring
    items
    PHI Learning Private Limited New Delhi

    Earnings Quality

    28 June 2013

    PHI Learning Private Limited New Delhi

    Techniques of Financial Statement


    Analysis
    
    
    
    

    28 June 2013

    Horizontal analysis
    Trend analysis
    Vertical analysis
    Ratio analysis

    PHI Learning Private Limited New Delhi

    Profitability Ratios
    

    Profit margin
    

    
    
    

    Asset turnover
    Return on assets
    Return on equity
    

    28 June 2013

    Operating profit

    Effect of leveraging

    Earnings per share


    PHI Learning Private Limited New Delhi

    The DuPont Chart

    28 June 2013

    PHI Learning Private Limited New Delhi

    10

    Liquidity Ratios
    
    
    

    Current ratio
    Quick ratio
    Debtor turnover
    

    Inventory turnover
    

    28 June 2013

    Debt collection period


    Inventory holding period

    Operating cycle
    PHI Learning Private Limited New Delhi

    11

    Solvency Ratios
    
    
    

    28 June 2013

    Debt-to-equity ratio
    Liabilities-to-equity ratio
    Interest cover

    PHI Learning Private Limited New Delhi

    12

    Understanding Annual Reports

    28 June 2013

    PHI Learning Private Limited New Delhi

    13

    Capital Market Standing


    
    
    
    

    28 June 2013

    Price-earnings ratio
    Price-to-book ratio
    Dividend yield
    Beta

    PHI Learning Private Limited New Delhi

    14

    Corporate Disclosure Policy


    
    
    

    Why disclosure regulation?


    Mandatory vs. voluntary disclosure
    Forces that drive voluntary disclosure
    
    
    
    

    28 June 2013

    Capital market
    Product market
    Managerial labour market
    Shareholder litigation

    PHI Learning Private Limited New Delhi

    15

    Efficient Market Hypothesis


    
    

    Understanding market efficiency


    Implications of market efficiency
    
    
    

    28 June 2013

    Accounting information and stock prices


    Accounting method differences
    Effect of mandatory disclosures

    PHI Learning Private Limited New Delhi

    16

    Earnings Management
    
    

    
    

    28 June 2013

    Defining earnings management


    Factors affecting managerial
    judgement
    Income-increasing and incomedecreasing earnings management
    Big bath
    Why are accounting frauds few and
    far between?
    PHI Learning Private Limited New Delhi

    17

    End of Chapter 11
    Financial Statement Analysis

    28 June 2013

    PHI Learning Private Limited New Delhi

    18

    You might also like