Cover image for Financial reporting & analysis
Title:
Financial reporting & analysis
Author:
Revsine, Lawrence.
Personal Author:
Publication Information:
Upper Saddle River, N.J. : Prentice Hall, [1999]

©1999
Physical Description:
xviii, 988 pages : color illustrations ; 26 cm
General Note:
Includes index.
Language:
English
ISBN:
9780137686230
Format :
Book

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HF5681.B2 R398 1999 Adult Non-Fiction Non-Fiction Area
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Summary

Summary

Many headlines in todays leading business publications talk about how managers are cookin the books to meet earnings targets or analysts earnings projections. How can managers utilize the flexibility in GAAP to manipulate the numbers for their own purposes? How can analysts learn how to uncover the hidden truths behind reported accounting numbers and interpret financial statements correctly? Financial Reporting & Analysis by Revsine/Collins/Johnson emphasizes both the process of financial reporting and the analysis of financial statements. This book employs a true user perspective by discussing the contracting and decision implications of accounting - and this helps readers understand why accounting choices matter and to whom. Revsine, Collins, and Johnson train their readers to be good financial detectives, able to read, use, and interpret the statements and-most importantly - understand how and why managers can utilize the flexibility in GAAP to manipulate the numbers for their own purposes. Extensive real-world examples are designed to build interest and expand understanding not only of current practices, but also how to make comparisons between firms. For example: * See how


Table of Contents

Chapter 1 The Economic and Institutional Setting for Financial Reportingp. 1
Why Financial Statements Are Importantp. 2
Economics of Accounting Informationp. 5
A Closer Look at Professional Analystsp. 11
The Rules of the Financial Reporting Gamep. 14
An International Perspectivep. 22
Challenges Confronting the Analystp. 24
Appendix GAAP in the United Statesp. 25
Chapter 2 Accrual Accounting and Income Determinationp. 39
Example: Cash versus Accrual Income Measurementp. 40
Measuring Profit Performance: Revenues and Expensesp. 43
Income Statement Format and Classificationp. 51
Comprehensive Incomep. 63
Appendix Review of Accounting Procedures and T-Account Analysisp. 67
Chapter 3 Additional Topics in Income Determinationp. 101
Revenue Recognition Prior to Salep. 101
Revenue Recognition Subsequent to Salep. 110
Earnings Managementp. 113
Chapter 4 Structure of the Balance Sheet and Statement of Cash Flowsp. 131
Classification Criteria and Measurement Conventions for Balance Sheet Accountsp. 132
Statement of Cash Flowsp. 143
Chapter 5 Essentials of Financial Statement Analysisp. 173
Basic Approachesp. 173
Quaker Oats Company--An Illustrationp. 175
Profitability, Competition, and Business Strategyp. 184
Return on Equity and Financial Leveragep. 197
Chapter 6 The Role of Financial Information in Valuation, Cash Flow Analysis and Credit Risk Assessmentp. 233
Corporate Valuationp. 234
Research on Earnings and Equity Valuationp. 239
Valuing a Business Opportunity (An Illustration)p. 250
Cash Flow Analysis and Credit Riskp. 253
Appendix A Abnormal Earnings Valuation for Reebokp. 261
Appendix B Measuring Cash Flow at Standard and Poor'sp. 267
Chapter 7 The Role of Financial Information in Contractingp. 295
Conflicts of Interest in Business Relationshipsp. 296
Lending Agreements and Debt Covenantsp. 297
Management Compensationp. 304
Regulatory Agenciesp. 314
Analytical Insights: Identifying "Managed" Earningsp. 318
Chapter 8 Receivablesp. 343
Assessing the Net Realizable Value of Accounts Receivablep. 343
Analytical Insight: Do Existing Receivables Represent Real Sales?p. 348
Imputed Interest on Trade Notes Receivablep. 352
Accelerating Cash Collection: Selling Receivables and Collateralized Borrowingsp. 356
Troubled Debt Restructuringp. 362
Chapter 9 Inventoriesp. 387
An Overview of Inventory Accounting Issuesp. 388
Determining Inventory Quantitiesp. 390
Items Included in Inventoryp. 393
Costs Included in Inventoryp. 393
Absorption Costing Versus Variable Costingp. 394
Cost Flow Assumptions: The Conceptsp. 397
Inflation, LIFO Reserves, and the LIFO Effect on Incomep. 406
LIFO Liquidationp. 408
Eliminating LIFO Ratio Distortionsp. 413
Tax Implications of LIFOp. 414
Eliminating Realized Holding Gains for FIFO Firmsp. 415
Inventory Errorsp. 416
Analytical Insights: LIFO Dangersp. 418
Empirical Evidence on Inventory Policy Choicep. 419
Appendix A Eliminating Realized Holding Gains from FIFO Incomep. 422
Appendix B Lower of Cost or Market Methodp. 424
Appendix C Dollar Value LIFOp. 428
Overview of Dollar Value LIFOp. 429
Chapter 10 Long-Lived Assets and Depreciationp. 457
Measuring the Carrying Amount of Long-Lived Assetsp. 458
Long-Lived Asset Measurement Rules Illustratedp. 460
Financial Analysis and Fixed Asset Reportingp. 464
Intangible Assetsp. 468
A Case Study of Ambiguities in Capitalization Criteria: Oil and Gas Exploration Costsp. 472
Asset Impairmentp. 475
Obligations Arising from Retiring Long-Lived Assetsp. 477
Depreciationp. 478
International Perspectivep. 484
Chapter 11 Financial Instruments as Liabilitiesp. 509
Bonds Payablep. 510
Managerial Incentives and Financial Reporting for Debtp. 521
Incentives for Off-Balance Sheet Liabilitiesp. 527
Hedgingp. 529
Loss Contingenciesp. 546
Chapter 12 Financial Reporting for Leasesp. 575
Evolution of Lease Accountingp. 575
Lessee Accountingp. 578
Lessor Accountingp. 589
Additional Leasing Aspectsp. 597
Appendix Making Balance Sheet Data Comparable by Adjusting for Off-Balance Sheet Leasesp. 600
Chapter 13 Income Tax Reportingp. 629
Understanding Income Tax Reportingp. 630
Using Footnote Disclosures to Improve Financial Analysisp. 648
Appendix A Comprehensive Interperiod Tax Allocation Problemp. 661
Chapter 14 Pensions and Postretirement Benefitsp. 689
Financial Reporting for Pensionsp. 691
Postretirement Benefits Other than Pensionsp. 719
Are Pension and Other Postretirement Benefits (OPEB) Disclosures Useful? The Research Evidencep. 723
Chapter 15 Financial Reporting for Owners' Equityp. 758
Appropriate Income Measurementp. 758
Compliance with Contract Termsp. 763
Legality of Corporate Distributionsp. 767
Earnings per Sharep. 770
Accounting for Stock-Based Compensationp. 774
Convertible Debtp. 783
Appendix Employee Stock Ownership Plansp. 786
Chapter 16 Intercorporate Equity Investmentsp. 817
Minority Ownershipp. 818
Majority Ownershipp. 828
Foreign Subsidiariesp. 840
Chapter 17 Statement of Cash Flowsp. 883
Statement Formatp. 884
Preparing the Cash Flow Statementp. 891
Reconciling Between Statements: Some Complexitiesp. 898
Analytical Insights: Cash Burn Rate of Internet Stocksp. 904
Chapter 18 Overview of International Financial Reporting Differences and Inflationp. 939
An International Financial Reporting Mapp. 940
Inflation Accountingp. 952
Appendix I Present Value Tablesp. 983
Appendix II WWW/Electronic Resources for Financial Informationp. 986
Indexp. 990