Financial Statements: Economic Analysis and Interpretation

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Gut/Very good: Buch bzw. Schutzumschlag mit wenigen Gebrauchsspuren an Einband, Schutzumschlag oder Seiten. / Describes a book or dust jacket that does show some signs of wear on either the binding, dust jacket or pages. N° de ref. del artículo M01845780108-V

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Reseña del editor: "Financial Statements: Economic analysis and interpretation", explains the logic of financial statements and how we use them to analyse firms in economic terms. The book is aimed both at practitioners and students and is fully international in scope. The approach and coverage are quite different to previous books on accounting. The book looks at financial statements from the perspective of users. It employs an economic model from investment theory to organize the discussion, leading to a focus on the integrity of the balance sheet - on the completeness of the balance sheet and on the valuation of assets and liabilities. This approach brings a remarkable amount of order and simplicity to an otherwise complex subject. So, though the book is quite short, it contains a comprehensive review of how financial statements are analysed in practice, and of 'GAAP' or Generally Accepted Accounting Principles, comparing the two dominant systems, US GAAP and IFRS. The book is in four parts: Part 1, Introduction to accounting, explain the logic of accounting and describes the content of a balance sheet and an income statement. It shows how a firm's income depends on the 'accounting model' it uses - that is, what assets and liabilities are recognized in the balance sheet and at what values. Part 2, Return on capital, shows how to calculate the return that a firm is earning on its capital. Using financial statement data to calculate a 'value metric', which is a measure of investment return that can be compared to the firm's cost of capital, is a stern test of accounting. The book explains how the accounting would have to be done to give the data integrity needed for reliable measures of investment return. Measuring investment return is an important task but, most of the time, we read financial statements in order to get as rich an understanding as we can of the economics of a firm. Part 3, Financial analysis explains how we should conduct a forensic analysis of the firm's operating profitability, cash flow, capital structure, and growth. The book explains how the appearance of the firm's profitability, financial structure, and cash flow reflect both the firm's choice of accounting model, but also its business model. The book also emphasises the role of financial analysis as a process of economic story telling in which we constantly seek more data, but where the limitations of firms' disclosure means that the stories we tell necessarily remain conjectures. Part 4 Accounting analysis, conducts a systematic review of GAAP to identify the accounting issues that affect financial analysis. It examines the completeness of the balance sheet: the recognition of assets and liabilities in the balance sheet; and how firms write complex contracts to keep some assets and the related borrowing off the balance sheet. It explains how assets and liabilities are valued. Finally, the book examines the integrity of the income statement; how income is measured, and how it is presented.