投资学 博迪 第10版课后习题答案19 Investments 10th Edition Textbook Solutions Chapter 19.pdfVIP

Chapter 19 - Financial Statement Analysis CHAPTER 19: FINANCIAL STATEMENT ANALYSIS PROBLEM SETS 1. The major difference in approach of international financial reporting standards and U.S. GAAP accounting stems from the difference between principles and rules. U.S. GAAP accounting is rules-based, with extensive detailed rules to be followed in the preparation of financial statements; many international standards, European Union adapted IFRS, allow much greater flexibility, as long as conformity with general principles is demonstrated. Even though U.S. GAAP is generally more detailed and specific, issues of comparability still arise among U.S. companies. Comparability problems are still greater among companies in foreign countries. 2. Earnings management should not matter in a truly efficient market, where all publicly available information is reflected in the price of a share of stock. Investors can see through attempts to manage earnings so that they can determine a company’s true profitability and, hence, the intrinsic value of a share of stock. However, if firms do engage in earnings management, then the clear implication is that managers do not view financial markets as efficient. 3. Both credit rating agencies and stock market analysts are likely to be more or less interested in all of the ratios discussed in this chapter (as well as many other ratios and forms of analysis). Since the Moody’s and Standard and Poor’s ratings assess bond default risk, these agencies are most interested in leverage ratios. A stock market analyst would be most interested in profitability and market price ratios. 4. ROA = ROS ×ATO The only way that Crusty Pie can have an ROS higher than the industry average and an ROA equal to the industry average is for its ATO to be lower than the industry average. 5.