chapter04AnalysisofFinancialStatements(国际投资,英文版)..ppt

Francis Ibbotson Chapter 4: Analysis of Financial Statements Analysis of Financial Statements Chapter 4 Background Financial statements aid in the process of fundamental analysis Fundamental analysts evaluate financial ratios as an aid to determine if a security is over- or under-priced The efficient market theory suggests that publicly available financial statements offer nothing of value Professional security analysts have already discovered pertinent information and traded based on that information Financial Statements Large public firms issue quarterly financial statements Small firms may only issue annual statements Closely-held corporations may not issue public financial statements Main financial statements Balance sheet Income and expense statement Statement of cash flows Balance Sheet Represents historical value of firm’s assets, liabilities and stockholders’ equity on the day the accounting period ends Assets = Liability + Stockholders’ Equity Stockholders’ Equity represents firm’s net worth (Book value of owners’ equity) Most firms end the fiscal year on December 31 KO’s Balance Sheet Income Expense Statement Report the flows that occurred during the accounting period AKA profit and loss statement Sales – Total Expenses = Income (Loss) KO’s Income Expense Statement Statement of Cash Flows Cash flows are the net cash remaining after all reinvestments have been deducted Cash flow is not affected by Accelerated depreciation rules Arbitrary inventory valuation rules Accrual methods of accounting Accounting income is more ambiguous than a firm’s cash flows KO’s Statement of Cash Flows KO’s Statement of Cash Flows KO’s Cash Flows Sources of Financial Statements Publicly traded companies in the U.S. are required to make full disclosure of their financial statements Usually a phone call or letter is all that is needed firm will mail statements to you SEC’s Electronic Data Gathering Analysis and Retrieval (EDGAR) System has the information for free at /edgarhp