Financial statement analysis a practitioners guide pdf free download

The book that fills the practitioner need for a distillation of the most important tools and …. Robinson, Elaine Henry, Wendy L.

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Skip to main content. Start your free trial. Book description An updated guide to the essential discipline of financial statement analysis In Financial Statement Analysis, Fourth Edition , leading investment authority Martin Fridson returns with Fernando Alvarez to provide the analytical framework you need to scrutinize financial statements, whether you're evaluating a company's stock price or determining valuations for a merger or acquisition.

They moved beyond exaggeration to outright fabrication of earnings through the use of derivatives and special purpose vehicles that never showed up in financial statements and had little to do with the production and sale of goods and services. This insidious trend culminated in colossal accounting scandals involving companies such as Enron and WorldCom, which shook confidence not only in financial reporting but also in the securities markets.

Government responded to the outrage over financial frauds by enacting the Sarbanes-Oxley Act of They were thereby exposed to greater risk than formerly of prosecution and conviction for misrepresentation. Sarbanes-Oxley did create a deterrent to untruthful reporting, but as case studies in this new edition demonstrate, users of financial statements still cannot breathe easy.

To help readers avoid being misled by deceptive financial statements, we continue to urge them to combine an understanding of accounting principles with a corporate finance perspective. We facilitate such integration of disciplines throughout Financial Statement Analysis, making excursions into economics and business management as well.

In addition, we encourage analysts to consider the institutional context in which financial reporting occurs. The issuers of financial statements also exert a strong influence over the creation of the accounting principles, with powerful politicians sometimes carrying their water. As in the third edition, we highlight success stories in the critical examination of financial statements. Wherever we can find the necessary documentation, we show not only how a corporate debacle could have been foreseen through application of basis analytical techniques but also how practicing analysts actually did detect the problem before it became widely recognized.

Readers will be encouraged by these examples, we hope, to undertake genuine, goal-oriented analysis, instead of simply going through the motions of calculating standard financial ratios.

We will not allow a band of greedy short sellers to destroy the value created by our outstanding employees. Some companies continue to succeed in burying misrepresentations in ways that cannot be detected by standard techniques such as ratio analysis. They manage to keep their auditors in the dark or succeed in corrupting them, removing a key line of defense for users of financial statements. By reading the case studies presented in this chapter, readers can observe corporate behavior that puts companies under suspicion by seasoned financial detectives such as short sellers.

We also highlight recent research linking financial misreporting to words and phrases used by corporate managers in conference calls with investors and analysts. As for the plan of Financial Statement Analysis, readers should not feel compelled to tackle its chapters in the order we have assigned to them. To aid those who want to jump in somewhere in the middle of the book, we provide cross-referencing and a glossary. Words that are defined in the glossary are shown in bold-faced type in the text.

Although skipping around will be the most efficient approach for many readers, a logical flow does underlie the sequencing of the material. The section explores the complex motivations of issuing firms and their managers. We also study the distortions produced by the organizational context in which the analyst operates.