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Business Analysis and Valuation Using Financial Statements, Text and Cases-3rd -Palepu.pdf

Business Analysis and Valuation…

上传者: nwguru 2012-12-16 评分 0 0 0 0 0 0 暂无简介 简介 举报

简介:本文档为《Business Analysis and Valuation Using Financial Statements, Text and Cases-3rd -Palepupdf》,可适用于经济金融领域,主题内容包含chapterAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsTh符等。

chapterAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsThepurposeofthischapteristooutlineacomprehensiveframeworkforfinancialstatementanalysisBecausefinancialstatementsprovidethemostwidelyavailabledataonpubliccorporations’economicactivities,investorsandotherstakeholdersrelyonfinancialreportstoassesstheplansandperformanceoffirmsandcorporatemanagersAvarietyofquestionscanbeaddressedbybusinessanalysisusingfinancialstatements,asshowninthefollowingexamples:•Asecurityanalystmaybeinterestedinasking:“HowwellisthefirmIamfollowingperformingDidthefirmmeetmyperformanceexpectationsIfnot,whynotWhatisthevalueofthefirm’sstockgivenmyassessmentofthefirm’scurrentandfutureperformance”•Aloanofficermayneedtoask:“WhatisthecreditriskinvolvedinlendingacertainamountofmoneytothisfirmHowwellisthefirmmanagingitsliquidityandsolvencyWhatisthefirm’sbusinessriskWhatistheadditionalriskcreatedbythefirm’sfinancinganddividendpolicies”•Amanagementconsultantmightask:“WhatisthestructureoftheindustryinwhichthefirmisoperatingWhatarethestrategiespursuedbyvariousplayersintheindustryWhatistherelativeperformanceofdifferentfirmsintheindustry”•Acorporatemanagermayask:“IsmyfirmproperlyvaluedbyinvestorsIsourinvestorcommunicationprogramadequatetofacilitatethisprocess”•Acorporatemanagercouldask:“IsthisfirmapotentialtakeovertargetHowmuchvaluecanbeaddedifweacquirethisfirmHowcanwefinancetheacquisition”•Anindependentauditorwouldwanttoask:“Aretheaccountingpoliciesandaccrualestimatesinthiscompany’sfinancialstatementsconsistentwithmyunderstandingofthisbusinessanditsrecentperformanceDothesefinancialreportscommunicatethecurrentstatusandsignificantrisksofthebusiness”Financialstatementanalysisisavaluableactivitywhenmanagershavecompleteinformationonafirm’sstrategiesandavarietyofinstitutionalfactorsmakeitunlikelythattheyfullydisclosethisinformationInthissetting,outsideanalystsattempttocreate“insideinformation”fromanalyzingfinancialstatementdata,therebygainingvaluableinsightsaboutthefirm’scurrentperformanceandfutureprospectsTounderstandthecontributionthatfinancialstatementanalysiscanmake,itisimportanttounderstandtheroleoffinancialreportinginthefunctioningofcapitalmarketsFrameworkJasonHighlightAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsandtheinstitutionalforcesthatshapefinancialstatementsTherefore,wepresentfirstabriefdescriptionoftheseforcesthenwediscussthestepsthatananalystmustperformtoextractinformationfromfinancialstatementsandprovidevaluableforecastsTHEROLEOFFINANCIALREPORTINGINCAPITALMARKETSAcriticalchallengeforanyeconomyistheallocationofsavingstoinvestmentopportunitiesEconomiesthatdothiswellcanexploitnewbusinessideastospurinnovationandcreatejobsandwealthatarapidpaceIncontrast,economiesthatmanagethisprocesspoorlydissipatetheirwealthandfailtosupportbusinessopportunitiesInthetwentiethcentury,wehaveseentwodistinctmodelsforchannelingsavingsintobusinessinvestmentsCommunistandsocialistmarketeconomieshaveusedcentralplanningandgovernmentagenciestopoolnationalsavingsandtodirectinvestmentsinbusinessenterprisesThefailureofthismodelisevidentfromthefactthatmostoftheseeconomieshaveabandoneditinfavorofthesecondmodelthemarketmodelInalmostallcountriesintheworldtoday,capitalmarketsplayanimportantroleinchannelingfinancialresourcesfromsaverstobusinessenterprisesthatneedcapitalFigureprovidesaschematicrepresentationofhowcapitalmarketstypicallyworkSavingsinanyeconomyarewidelydistributedamonghouseholdsThereareusuallymanynewentrepreneursandexistingcompaniesthatwouldliketoattractthesesavingstofundtheirbusinessideasWhilebothsaversandentrepreneurswouldliketodobusinesswitheachother,matchingsavingstobusinessinvestmentopportunitiesiscomplicatedforatleasttworeasonsFirst,entrepreneurstypicallyhavebetterinformationthansaversonthevalueofbusinessinvestmentopportunitiesSecond,communicationbyentrepreneurstoinvestorsisnotcompletelycrediblebecauseinvestorsknowentrepreneurshaveanincentivetoinflatethevalueoftheirideasFigureCapitalMarketsSavingsBusinessIdeasFinancialIntermediariesInformationIntermediariesAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsPartFrameworkTheseinformationandincentiveproblemsleadtowhateconomistscallthe“lemons”problem,whichcanpotentiallybreakdownthefunctioningofthecapitalmarketItworkslikethisConsiderasituationwherehalfthebusinessideasare“good”andtheotherhalfare“bad”Ifinvestorscannotdistinguishbetweenthetwotypesofbusinessideas,entrepreneurswith“bad”ideaswilltrytoclaimthattheirideasareasvaluableasthe“good”ideasRealizingthispossibility,investorsvaluebothgoodandbadideasatanaveragelevelUnfortunately,thispenalizesgoodideas,andentrepreneurswithgoodideasfindthetermsonwhichtheycangetfinancingtobeunattractiveAstheseentrepreneursleavethecapitalmarket,theproportionofbadideasinthemarketincreasesOvertime,badideas“crowdout”goodideas,andinvestorsloseconfidenceinthismarketTheemergenceofintermediariescanpreventsuchamarketbreakdownIntermediariesarelikeacarmechanicwhoprovidesanindependentcertificationofausedcar’squalitytohelpabuyerandselleragreeonapriceTherearetwotypesofintermediariesinthecapitalmarketsFinancialintermediaries,suchasventurecapitalfirms,banks,mutualfunds,andinsurancecompanies,focusonaggregatingfundsfromindividualinvestorsandanalyzingdifferentinvestmentalternativestomakeinvestmentdecisionsInformationintermediaries,suchasauditors,financialanalysts,bondratingagencies,andthefinancialpress,focusonprovidinginformationtoinvestors(andtofinancialintermediarieswhorepresentthem)onthequalityofvariousbusinessinvestmentopportunitiesBoththesetypesofintermediariesaddvaluebyhelpinginvestorsdistinguish“good”investmentopportunitiesfromthe“bad”onesFinancialreportingplaysacriticalroleinthefunctioningofboththeinformationintermediariesandfinancialintermediariesInformationintermediariesaddvaluebyeitherenhancingthecredibilityoffinancialreports(asauditorsdo),orbyanalyzingtheinformationinthefinancialstatements(asanalystsandtheratingagenciesdo)Financialintermediariesrelyontheinformationinthefinancialstatements,andsupplementthisinformationwithothersourcesofinformation,toanalyzeinvestmentopportunitiesInthefollowingsection,wediscusskeyaspectsofthefinancialreportingsystemdesignthatenableittoplayeffectivelythisvitalroleinthefunctioningofthecapitalmarketsFROMBUSINESSACTIVITIESTOFINANCIALSTATEMENTSCorporatemanagersareresponsibleforacquiringphysicalandfinancialresourcesfromthefirm’senvironmentandusingthemtocreatevalueforthefirm’sinvestorsValueiscreatedwhenthefirmearnsareturnonitsinvestmentinexcessofthecostofcapitalManagersformulatebusinessstrategiestoachievethisgoal,andtheyimplementthemthroughbusinessactivitiesAfirm’sbusinessactivitiesareinfluencedbyitseconomicenvironmentanditsownbusinessstrategyTheeconomicenvironmentincludesthefirm’sindustry,itsinputandoutputmarkets,andtheregulationsunderwhichthefirmoperatesThefirm’sbusinessstrategydetermineshowthefirmpositionsitselfinitsenvironmenttoachieveacompetitiveadvantageAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsAsshowninFigure,afirm’sfinancialstatementssummarizetheeconomicconsequencesofitsbusinessactivitiesThefirm’sbusinessactivitiesinanytimeperiodaretoonumeroustobereportedindividuallytooutsidersFurther,someoftheactivitiesundertakenbythefirmareproprietaryinnature,anddisclosingtheseactivitiesindetailcouldbeadetrimenttothefirm’scompetitivepositionThefirm’saccountingsystemprovidesamechanismthroughwhichbusinessactivitiesareselected,measured,andaggregatedintofinancialstatementdataIntermediariesusingfinancialstatementdatatodobusinessanalysishavetobeawarethatfinancialreportsareinfluencedbothbythefirm’sbusinessactivitiesandbyitsFigureFromBusinessActivitiestoFinancialStatementsBusinessEnvironmentLabormarketsCapitalmarketsProductmarkets:SuppliersCustomersCompetitorsBusinessregulationsBusinessActivitiesOperatingactivitiesInvestmentactivitiesFinancingactivitiesAccountingEnvironmentCapitalmarketstructureContractingandgovernanceAccountingconventionsandregulationsTaxandfinancialaccountinglinkagesThirdpartyauditingLegalsystemforaccountingdisputesAccountingSystemMeasureandreporteconomicconsequencesofbusinessactivitiesFinancialStatementsManagers’superiorinformationonbusinessactivitiesEstimationerrorsDistortionsfrommanagers’accountingchoicesBusinessStrategyScopeofbusiness:DegreeofdiversificationTypeofdiversificationCompetitivepositioning:CostleadershipDifferentiationKeysuccessfactorsandrisksAccountingStrategyChoiceofaccountingpoliciesChoiceofaccountingestimatesChoiceofreportingformatChoiceofsupplementarydisclosuresAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsPartFrameworkaccountingsystemAkeyaspectoffinancialstatementanalysis,therefore,involvesunderstandingtheinfluenceoftheaccountingsystemonthequalityofthefinancialstatementdatabeingusedintheanalysisTheinstitutionalfeaturesofaccountingsystemsdiscussedbelowdeterminetheextentofthatinfluenceAccountingSystemFeature:AccrualAccountingOneofthefundamentalfeaturesofcorporatefinancialreportsisthattheyarepreparedusingaccrualratherthancashaccountingUnlikecashaccounting,accrualaccountingdistinguishesbetweentherecordingofcostsandbenefitsassociatedwitheconomicactivitiesandtheactualpaymentandreceiptofcashNetincomeistheprimaryperiodicperformanceindexunderaccrualaccountingTocomputenetincome,theeffectsofeconomictransactionsarerecordedonthebasisofexpected,notnecessarilyactual,cashreceiptsandpaymentsExpectedcashreceiptsfromthedeliveryofproductsorservicesarerecognizedasrevenues,andexpectedcasholowsassociatedwiththeserevenuesarerecognizedasexpensesTheneedforaccrualaccountingarisesfrominvestors’demandforfinancialreportsonaperiodicbasisBecausefirmsundertakeeconomictransactionsonacontinualbasis,thearbitraryclosingofaccountingbooksattheendofareportingperiodleadstoafundamentalmeasurementproblemSincecashaccountingdoesnotreportthefulleconomicconsequenceofthetransactionsundertakeninagivenperiod,accrualaccountingisdesignedtoprovidemorecompleteinformationonafirm’speriodicperformanceAccountingSystemFeature:AccountingStandardsandAuditingTheuseofaccrualaccountingliesatthecenterofmanyimportantcomplexitiesincorporatefinancialreportingBecauseaccrualaccountingdealswithexpectationsoffuturecashconsequencesofcurrentevents,itissubjectiveandreliesonavarietyofassumptionsWhoshouldbechargedwiththeprimaryresponsibilityofmakingtheseassumptionsAfirm’smanagersareentrustedwiththetaskofmakingtheappropriateestimatesandassumptionstopreparethefinancialstatementsbecausetheyhaveintimateknowledgeoftheirfirm’sbusinessTheaccountingdiscretiongrantedtomanagersispotentiallyvaluablebecauseitallowsthemtoreflectinsideinformationinreportedfinancialstatementsHowever,sinceinvestorsviewprofitsasameasureofmanagers’performance,managershaveincentivestousetheiraccountingdiscretiontodistortreportedprofitsbymakingbiasedassumptionsFurther,theuseofaccountingnumbersincontractsbetweenthefirmandoutsidersprovidesanothermotivationformanagementmanipulationofaccountingnumbersIncomemanagementdistortsfinancialaccountingdata,makingthemlessvaluabletoexternalusersoffinancialstatementsTherefore,thedelegationoffinancialreportingdecisionstocorporatemanagershasbothcostsandbenefitsAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsAnumberofaccountingconventionshaveevolvedtoensurethatmanagersusetheiraccountingflexibilitytosummarizetheirknowledgeofthefirm’sbusinessactivities,andnottodisguiserealityforselfservingpurposesForexample,themeasurabilityandconservatismconventionsareaccountingresponsestoconcernsaboutdistortionsfrommanagers’potentiallyoptimisticbiasBoththeseconventionsattempttolimitmanagers’optimisticbiasbyimposingtheirownpessimisticbiasAccountingstandards(GenerallyAcceptedAccountingPrinciples),promulgatedbytheFinancialAccountingStandardsBoard(FASB)andsimilarstandardsettingbodiesinothercountries,alsolimitpotentialdistortionsthatmanagerscanintroduceintoreportednumbersUniformaccountingstandardsattempttoreducemanagers’abilitytorecordsimilareconomictransactionsindissimilarways,eitherovertimeoracrossfirmsIncreaseduniformityfromaccountingstandards,however,comesattheexpenseofreducedflexibilityformanagerstoreflectgenuinebusinessdifferencesintheirfirm’sfinancialstatementsRigidaccountingstandardsworkbestforeconomictransactionswhoseaccountingtreatmentisnotpredicatedonmanagers’proprietaryinformationHowever,whenthereissignificantbusinessjudgmentinvolvedinassessingatransaction’seconomicconsequences,rigidstandardswhichpreventmanagersfromusingtheirsuperiorbusinessknowledgewouldbedysfunctionalFurther,ifaccountingstandardsaretoorigid,theymayinducemanagerstoexpendeconomicresourcestorestructurebusinesstransactionstoachieveadesiredaccountingresultAuditing,broadlydefinedasaverificationoftheintegrityofthereportedfinancialstatementsbysomeoneotherthanthepreparer,ensuresthatmanagersuseaccountingrulesandconventionsconsistentlyovertime,andthattheiraccountingestimatesarereasonableTherefore,auditingimprovesthequalityofaccountingdataThirdpartyauditingmayalsoreducethequalityoffinancialreportingbecauseitconstrainsthekindofaccountingrulesandconventionsthatevolveovertimeForexample,theFASBconsiderstheviewsofauditorsinthestandardsettingprocessAuditorsarelikelytoargueagainstaccountingstandardsproducingnumbersthataredifficulttoaudit,eveniftheproposedrulesproducerelevantinformationforinvestorsThelegalenvironmentinwhichaccountingdisputesbetweenmanagers,auditors,andinvestorsareadjudicatedcanalsohaveasignificanteffectonthequalityofreportednumbersThethreatoflawsuitsandresultingpenaltieshavethebeneficialeffectofimprovingtheaccuracyofdisclosureHowever,thepotentialforasignificantlegalliabilitymightalsodiscouragemanagersandauditorsfromsupportingaccountingproposalsrequiringriskyforecasts,suchasforwardlookingdisclosuresAccountingSystemFeature:Managers’ReportingStrategyBecausethemechanismsthatlimitmanagers’abilitytodistortaccountingdataaddnoise,itisnotoptimaltouseaccountingregulationtoeliminatemanagerialflexibilitycompletelyTherefore,realworldaccountingsystemsleaveconsiderableroomformanagerstoinfluencefinancialstatementdataAfirm’sreportingstrategy,thatis,theAFrameworkforBusinessAnalysisandValuationUsingFinancialStatementsPartFrameworkmannerinwhichmanagersusetheiraccountingdiscretion,hasanimportantinfluenceonthefirm’sfinancialstatementsCorporatemanagerscanchooseaccountinganddisclosurepoliciesthatmakeitmoreorlessdifficultforexternalusersoffinancialreportstounderstandthetrueeconomicpictureoftheirbusinessesAccountingrulesoftenprovideabroadsetofalternativesfromwhichmanagerscanchooseFurther,managersareentrustedwithmakingarangeofestimatesinimplementingtheseaccountingpoliciesAccountingregulationsusuallyprescribeminimumdisclosurerequirements,buttheydonotrestrictmanagersfromvoluntarilyprovidingadditionaldisclosuresAsuperiordisclosurestrategywillenablemanagerstocommunicatetheunderlyingbusinessrealitytooutsideinvestorsOneimportantconstraintonafirm’sdisclosurestrategyisthecompetitivedynamicsinproductmarketsDisclosureofproprietaryinformationaboutbusinessstrategiesandtheirexpectedeconomicconsequencesmayhurtthefirm’scompetitivepositionSubjecttothisconstraint,managerscanusefinancialstatementstoprovideinformationusefultoinvestorsinassessingtheirfirm’strueeconomicperformanceManagerscanalsousefinancialreportingstrategiestomanipulateinvestors’perceptionsUsingthediscretiongrantedtothem,managerscanmakeitdifficultforinvestorstoidentifypoorperformanceonatimelybasisForexample,managerscanchooseaccountingpoliciesandestimatestoprovideanoptimisticassessmentofthefirm’strueperformanceTheycanalsomakeitcostlyforinvestorstounderstandthetrueperformancebycontrollingtheextentofinformationthatisdisclosedvoluntarilyTheextenttowhichfinancialstatementsareinformativeabouttheunderlyingbusinessrealityvariesacrossfirmsandacrosstimeforagivenfirmThisvariationinaccountingqualityprovidesbothanimportantopportunityandachallengeindoingbusinessanalysisTheprocessthroughwhichanalystscanseparatenoisefrominformationinfinancialstatements,andgainvaluablebusinessinsightsfromfinancialstatementanalysis,isdiscussednextFROMFINANCIALSTATEMENTSTOBUSINESSANALYSISBecausemanagers’insiderknowledgeisasourcebothofvalueanddistortioninaccountingdata,itisdifficultforoutsideusersoffinancialstatementstoseparatetrueinformationfromdistortionandnoiseNotbeingabletoundoaccountingdistortionscompletely,investors“discount”afirm’sreportedaccountingperformanceIndoingso,theymakeaprobabilisticassessmentoftheextenttowhichafirm’sreportednumbersreflecteconomicrealityAsaresult,investorscanhaveonlyanimpreciseassessmentofanindividualfirm’s

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