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Financial Statement Analysis & Valuation, 7e
by Easton, McAnally, Crawford, Sommers
| ISBN: 978-1-61853-625-9 | Copyright 2025
Instructor Requests
DATA ANALYTICS and DATA VISUALIZATION
New technologies are changing the landscape of accounting and financial reporting. Companies are increasingly using data analytics and visualization (charts, pictures, and graphs) to more effectively convey financial information. To familiarize students with data visualization, each module opens with a data dashboard and it uses real-world data analytics and applications for student learning. Each module contains Data Analytics Insight boxes that describe how data analytics applies to the topics. Analytics and visualizations are reinforced with assignments in each module that present data graphically and require students to analyze and interpret the data visualizations.
Data analytics questions are exclusively available on myBusinessCourse. We provide students with online access to author-created PowerBI dashboards where they can interact with the data and learn how to create their own data visualizations. We have partnered with Calcbench, a leading provider of data extracted from SE filings. Calcbench data underlies each of the Data Analytics Insights and all of the end-of-chapter data analytics assignments. This allows readers to work with actual and interesting financial statement data. These discussions and assignments are identified by the data analytics icon in the margin. SEE PAGES 2-9, 6-38, 7-18, 8-24.
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Welcome to Financial Statement Analysis & Valuation!
Welcome to the Seventh Edition of Financial Statement Analysis & Valuation. Our main goal in writing this book was to address the needs of today’s instructors and students interested in financial analysis and valuation by providing the most contemporary, engaging, and user‑oriented textbook available. This book is the product of extensive market research including focus groups, market surveys, class tests, manuscript reviews, and interviews with faculty from across the country as well as conversations with credit and equity analysts at a wide range of firms. We are grateful to students and faculty whose insights, suggestions and feedback greatly benefited this edition.
TARGET AUDIENCE
Financial Statement Analysis & Valuation is intended for use in a financial statement analysis
and/ or valuation course in which profitability analysis and security valuation are emphasized.
This book accommodates mini‑courses lasting
only a few days as well as extended courses lasting a full semester.
INNOVATIVE APPROACH
Financial Statement Analysis & Valuation is applications
oriented and focuses
on the most salient aspects of accounting, analysis, and valuation. It teaches students
how to read, analyze,
and interpret financial statement
data to make informed business decisions. This textbook makes financial
statement analysis and valuation
engaging, relevant,
and contemporary. To that end, it consistently incorporates real company
data, both in the body of each module and throughout the assignment material. The textbook takes a data‑driven approach to analysis and valuation; each module addresses applicable data analytic techniques.
FLEXIBLE STRUCTURE
The curricula, instructor preferences, and course lengths vary across colleges. Accordingly and to the extent possible,
the 15 modules that make up Financial Statement
Analysis & Valuation were designed independently of one another. This modular presentation enables each college and instructor
to “customize” the book to best fit their needs. Our introduction and discussion of financial statements
constitute Modules 1 and 2. Module
3 presents the analysis of financial statements
with an emphasis on analysis
of operating profitability. Module 4 introduces credit risk analysis. Modules 5 through 10 offer an analysis of accounting numbers and disclosures. The aim of those modules is to help
us better
interpret financial
statements and to adjust those
statements as necessary to improve
our
financial statement analysis. Modules 11 through 15 describe forecasting, cost of capital estimation, and company valuation.
The
textbook takes a data‑driven approach to analysis and valuation; each module addresses applicable data analytic techniques.
Flexibility for Courses of Varying Lengths
Many instructors have approached us to ask about suggested class structures based on courses of varying length. To that end, we provide the following table of possible course designs. For instructors desiring greater emphasis on accounting analysis, additional time can be spent on Modules 1 through 10. For instructors desiring greater emphasis on analysis and valuation, additional time can be spent on Modules 11 through 15.
INNOVATIVE PEDAGOGY
Financial Statement Analysis & Valuation includes special features specifically designed for the student with a keen interest in analysis and valuation.
Focus Companies for Each Module
Each module’s content is explained through the reporting activities of real companies. To that end, each module incorporates a “focus company” for special emphasis and demonstration. The enhanced instructional value of focus companies comes from the way they engage students in real analysis and interpretation. Focus companies were selected based on the industries that business students typically enter upon graduation
Focus Companies by Module
Real Company Data Throughout
Market research and reviewer feedback tell us that one of instructors' greatest frustrations with other financial statement analysis and valuation textbooks is their lack of real, contemporary company data. We have gone to great lengths to incorporate real company data throughout each module to reinforce important concepts and engage students. We engage nonaccounting students specializing in finance, marketing, management, real estate, operations, and so forth, with companies and scenarios that are relevant to them. For representative examples, SEE PAGES 3-19, 4-27, 5-27.
Analyst Adjustments
Analyst Adjustments are incorporated throughout most of the modules. These boxed elements explain and illustrate the types of adjustments analysts make to accounting information to make it more useful in their assessment of a firm. For representative examples, SEE PAGES 5-11, 6-12, 7-7.
Data Analytics and Data Visualization
See the Data Analytics tab for a detailed description of this new feature.
Business Insights & Analysis Insights
Updated Business Insight boxes throughout each module showcase real‑world business scenarios through the lens of financial statement
analysis. For representative examples, SEE PAGES 2-12, 3-26, 5-8. Analysis Insight
boxes, in select modules, highlight the importance of analysts’ professional judgment in financial analysis
as well as with the reformulation of financial statements. For representative examples, SEE PAGES 3-37, 10-29, 14-9.
Research Insights
Academic research plays an important
role in the way business is conducted, accounting and analysis are performed, and students are taught. It is important
for students to recognize how modern research and modern business practice interact. Therefore, we periodically incorporate relevant research to help students
understand the important
relation between
research and modern business. For representative examples, SEE PAGES 1-26, 3-26, 12-18.
Decision Orientation
One primary goal of a financial statement analysis and valuation
course is to teach students
the skills needed to
apply their accounting knowledge to
solving real business problems
and making informed business decisions.
With that goal in mind, Analysis Decision boxes in each
module encourage students to
apply the material presented
to solving
actual business scenarios.
Financial Statement Effects Template
As instructors, we recognize that the financial statement analysis and valuation course is not directed solely toward accounting majors. Financial Statement Analysis & Valuation embraces this reality. This book highlights financial reporting, analysis, valuation, interpretation, applications and decision making. We incorporate the following financial statement effects template to train students in understanding the economic ramifications of transactions and their impacts on financial statements. This analytical tool is a great resource for students in learning analysis and applying it to their future courses and careers. Each transaction is identified in the “Transaction” column. Then, the dollar amounts (positive or negative) of the financial statement effects are recorded in the appropriate balance sheet or income statement columns. The template also reflects the statement of cash flow effects (via the cash column) and the statement of stockholders’ equity effects (via the contributed capital and earned capital columns). The earned capital account is immediately updated to reflect any income or loss arising from each transaction (denoted by the arrow line from net income to earned capital). This template is instructive as it reveals the financial impacts of transactions, and it provides insights into the effects of accounting choices. For those desiring a more traditional analysis, journal entries and T‑accounts are shown in the margin.
Mid-Module and Module-End Reviews
Financial statement analysis and valuation can be challenging—especially for students lacking business experience or previous exposure
to finance, management, and other business courses.
To reinforce concepts
presented in each module and to ensure student comprehension, we include
multiple mid‑module and module‑end reviews that require
students to recall and apply the financial statement analysis and valuation techniques and concepts described in each module.
To aid students in developing
their comparative analysis
skills, most of those review problems center on
a company or companies that compete with the focus
company of that module.
For representative examples, SEE PAGES 3-17, 4-20, 11-7.
Experiential Learning
Students retain information longer if they can apply the lessons learned from the module content. To meet this need for experiential learning, this text includes an Ongoing Financial Statement and Analysis Project. This project uses Excel and includes financial statements for two companies Parker Hannifin (PH) and Illinois Tool Works (ITW). Quantitative and qualitative questions in each module require students to apply the lessons learned to complete a comprehensive financial statement analysis and valuation. The project helps students synthesize the material in the module and integrate material across modules. For representative examples, SEE PAGES 1-49, 3-61, 11-62.
Excellent, Class-Tested Assignment Materials
Excellent assignment
material is a must‑have component of any successful
textbook (and class). We
went to
great lengths to create the
best assignments
possible from contemporary financial statements. In keeping with the rest of the book, we used real company data extensively. We
also
ensured that assignments ref lect our belief that students should be trained in analyzing
accounting information
to make business decisions,
as opposed to working on mechanical
tasks. Assignments encourage students to analyze accounting information, interpret it, and apply the knowledge gained to a business decision or in a valuation context. There are six categories of assignments: Questions, Mini Exercises, Exercises, Problems, IFRS Applications, and Analysis Discussion
Points.
KEY CHANGES TO THIS EDITION
Based on classroom use and reviewer feedback, a number of substantive changes have been made in the new edition to further enhance the students’ experiences.
- Digital delivery enhanced
To serve the expanding delivery modes of higher education, we updated and expanded
our in‑module Reviews and Guided Example videos for all
modules (each Learning Objective has a Review/Guided
Example, as well as a corresponding eLecture). In addition, all objective assignments are available in MBC.
- Updated and expanded
data visualizations and analytics: Data analytics questions
have been updated and expanded
in each module to show their usage
in financial statement analysis. Author‑prepared videos demonstrate how to complete the data visualizations and analytics assignments.
- New Data Analytics Insights:
Each module includes new Data Analytics
Insights that provide
examples of how financial statement data can be analyzed
and visualized to uncover trends and address important
questions. Also, a new Appendix D entitled, “Data Analytics & Visualizations” provides an overview to create a baseline of knowledge.
- New analysis project: Each module concludes with a hands‑on analysis project set in mBC. Readers are led through an analysis of two competitors: Parker Hannifin (ticker: PH) and ITW (ticker: ITW). Readers apply the tools they learn in each module to complete a comprehensive financial statement analysis and valuation project.
- Integration of Calcbench data: We have partnered with Calcbench, a leading provider of data extracted from SEC filings. Calcbench data underlies each of the Data Analytics Insights and many of the end-of-chapter data analytics assignments. This allows readers to work with actual and interesting financial statement data.
- ESG reporting: We include relevant discussions of ESG reporting
and analysis whenever appropriate.
- Enhancements to mBC: Assignments in mBC are updated
to reflect new technology and reduce rounding issues. Downloadable Excel spreadsheets have
been developed for many
assignments. Solutions to algorithmic assignments have been added to this edition.
- Credit analysis: There is a new overarching framework for credit analysis to provide students context for this important topic. The
authors discuss common goals of credit analysis and the critical facets of this process.
They adopt the term “capital structure analysis” instead of “solvency analysis” in light of its growing popularity to emphasize
the importance of looking at all facets of a company’s capital
structure when conducting credit analysis.
- EBITDA: EBITDA is a term commonly used in practice.
This important measure is introduced in several places and explains how
it relates to net income and other
income statement measures. This includes
discussion of the pros and cons of using EBITDA and its variations.
- Analyzing intangible assets: New content
in Module 6 discusses a wide variety of intangible
assets including goodwill. The section discusses valuation methods, capitalization,
and the subsequent accounting
for intangibles. This includes explanation of the impairment of intangible assets and how to forecast
intangibles.
- Treasury Stock: In light of the marked increase
in the frequency and size of stock repurchases and retirements, this edition
includes an expanded discussion of this activity and demonstrates the financial statement impact of retiring
stock and its interpretation.
- Acquired Research and Development
expense: The
authors include a discussion of the origin and interpretation of acquired R&D
expenses for financial statement
analysis.
- Earnings Quality: We expand discussion of earnings quality to include a detailed look at
the relations among net income, accruals,
and cash f lows, along with academic research on
these subjects.
- New Analyst Insights: Several new Analyst Insights examine comprehensive income,
marketable securities, imputing lease expense from operating leases,
and other trending
topics.
- Financial statement implications of current events: We discuss important market implications to financial statement analysis such as the collapse of Silicon Valley Bank and its
connection to debt investments, the effect of unused office
space in the wake of the shift to work‑from‑home on lease arrangements, and other current
events.
- Multiple choice questions: Each module contains
a new set of multiple‑choice questions
for readers to quickly
check on their understanding of key concepts
and tools for each module.
- Solutions: Solutions are presented
entirely in MS Excel. Spreadsheets include all data from
the exercises and problems, which facilitates
student work and allows instructors to easily show demonstrate solutions.
SUPPLEMENT PACKAGE
For Instructors
- myBusinessCourse: A web-based learning and assessment program intended to complement your textbook and classroom instruction. This easy-to-use course management system grades homework automatically and
provides students with additional help when you are not available. Further, detailed diagnostic tools assess class and individual performance. myBusinessCourse is ideal for online courses, hybrid courses, or traditional face-to-face courses for which you want to offer students more resources to succeed. Assignments with the MBC
Homework logo in the margin are available in myBusinessCourse. eLecture videos are available for the module Learning Objectives, and Guided Examples for the in-module Reviews are available for you to assign students.
- Solutions Manual: Created by the authors, the Excel-based Solutions Manual contains complete solutions to all the assignments.
- PowerPoint: Created by the authors, the PowerPoint slides outline key elements of each module.
- Test Bank: The Test Bank includes multiple-choice items, exercises, short essay questions, and problems.
| Expand/Collapse All | |
|---|---|
| About the Authors (pg. iii) | |
| Preface (pg. v) | |
| Brief Contents (pg. xv) | |
| Contents (pg. xvi) | |
| Module 1: Framework for Analysis and Valuation (pg. 1-1) | |
| Step 1 Business Environment and Accounting (pg. 1-5) | |
| Review 1-1 (pg. 1-6) | |
| Financial Statements: Demand and Supply (pg. 1-6) | |
| Demand for Information (pg. 1-6) | |
| Supply of Information (pg. 1-9) | |
| International Accounting Standards (pg. 1-11) | |
| Review of Financial Statements (pg. 1-12) | |
| Balance Sheet (pg. 1-12) | |
| Income Statement (pg. 1-15) | |
| Statement of Stockholders’ Equity (pg. 1-17) | |
| Statement of Cash Flows (pg. 1-18) | |
| Information Beyond Financial Statements (pg. 1-19) | |
| Review 1-3 (pg. 1-19) | |
| Analyzing the Business Environment (pg. 1-20) | |
| Analyzing the Value-Chain (pg. 1-20) | |
| Five-Forces Analysis of Business Environment (pg. 1-20) | |
| SWOT Analysis of Business Environment (pg. 1-22) | |
| Analyzing Competitive Advantage (pg. 1-23) | |
| Review 1-4 (pg. 1-25) | |
| Step 2 Adjusting and Analyzing Financial Data (pg. 1-25) | |
| Managerial Choices in Financial Reporting (pg. 1-25) | |
| Analysis of Return on Assets (pg. 1-27) | |
| Components of Return on Assets (pg. 1-27) | |
| Analysis of Return on Equity (pg. 1-28) | |
| Review 1-5 (pg. 1-29) | |
| Step 3 Forecasting Financial Numbers (pg. 1-29) | |
| Review 1-6 (pg. 1-30) | |
| Step 4 Business Valuation (pg. 1-30) | |
| Valuation Models (pg. 1-31) | |
| Are Financial Data Relevant? (pg. 1-31) | |
| Financial Statement Analysis in an Efficient Capital Market (pg. 1-32) | |
| Analyzing Global Reports (pg. 1-33) | |
| Review 1-7 (pg. 1-33) | |
| Appendix 1A: Financial Statement Data and Analytics (pg. 1-34) | |
| SEC Filings (pg. 1-34) | |
| Data Analytics (pg. 1-36) | |
| Guidance Answer (pg. 1-37) | |
| Questions (pg. 1-39) | |
| Mini Exercises (pg. 1-40) | |
| Exercises (pg. 1-42) | |
| Problems (pg. 1-44) | |
| Analysis Decision Points (pg. 1-49) | |
| Ongoing Analysis Project (pg. 1-49) | |
| Solutions to Reviews (pg. 1-50) | |
| Module 2: Review of Business Activities and Financial Statements (pg. 2-1) | |
| Interpreting a Balance Sheet (pg. 2-3) | |
| Assets (pg. 2-3) | |
| Liabilities and Equity (pg. 2-5) | |
| Analyst Adjustments 2.1 (pg. 2-10) | |
| Review 2-1 (pg. 2-12) | |
| Interpreting an Income Statement (pg. 2-13) | |
| Recognizing Revenues and Expenses (pg. 2-14) | |
| Reporting Discontinued Operations (pg. 2-15) | |
| Analyst Adjustments 2.2 (pg. 2-16) | |
| Analyzing the Income Statement (pg. 2-16) | |
| Analyst Adjustments 2.3 (pg. 2-17) | |
| Review 2-2 (pg. 2-17) | |
| Interpreting a Statement of Stockholders’ Equity (pg. 2-18) | |
| Review 2-3 (pg. 2-18) | |
| Interpreting a Statement of Cash Flows (pg. 2-19) | |
| Statement Format and Data Sources (pg. 2-19) | |
| Review 2-4 (pg. 2-20) | |
| Articulation of Financial Statements (pg. 2-20) | |
| Retained Earnings Reconciliation (pg. 2-20) | |
| Financial Statement Linkages (pg. 2-21) | |
| Review 2-5 (pg. 2-22) | |
| Analyzing Transactions and Adjustments (pg. 2-22) | |
| Four-Step Accounting Cycle (pg. 2-23) | |
| Financial Statement Effects Template (pg. 2-23) | |
| Step 1-Analyze Transactions and Prepare Entries (pg. 2-24) | |
| Step 2-Prepare Accounting Adjustments (pg. 2-27) | |
| Step 3-Prepare Financial Statements (pg. 2-31) | |
| Step 4-Close the Books (pg. 2-32) | |
| Additional Information Sources (pg. 2-33) | |
| Form 10-K (pg. 2-33) | |
| Form 20-F and Form 40-F (pg. 2-34) | |
| Form 8-K (pg. 2-35) | |
| Analyst Reports (pg. 2-35) | |
| Credit Services (pg. 2-35) | |
| Data Services (pg. 2-36) | |
| Review 2-10 (pg. 2-36) | |
| Analyzing Global Reports (pg. 2-36) | |
| Guidance Answers (pg. 2-37) | |
| Multiple Choice (pg. 2-37) | |
| Questions (pg. 2-38) | |
| Mini Exercises (pg. 2-39) | |
| Exercises (pg. 2-41) | |
| Problems (pg. 2-47) | |
| Analysis Discussion Points (pg. 2-51) | |
| Data Analytics (pg. 2-51) | |
| Ongoing Analysis Project (pg. 2-51) | |
| Solutions to Reviews (pg. 2-52) | |
| Module 3: Profitability Analysis and Interpretation (pg. 3-1) | |
| Return on Equity (ROE) (pg. 3-3) | |
| Review 3-1 (pg. 3-5) | |
| ROE Disaggregation: DuPont Analysis (pg. 3-5) | |
| Return on Assets (ROA) (pg. 3-5) | |
| Financial Leverage (FL) (pg. 3-6) | |
| Noncontrolling Interest Ratio (NCIR) (pg. 3-6) | |
| Review 3-2 (pg. 3-7) | |
| Return on Assets and Its Disaggregation (pg. 3-8) | |
| Analyst Adjustments 3.1 (pg. 3-8) | |
| Analysis of Profitability and Productivity (pg. 3-9) | |
| Analysis of Profitability (pg. 3-10) | |
| Analysis of Productivity (pg. 3-11) | |
| Analysis of Financial Leverage (pg. 3-15) | |
| Analyst Adjustments 3.2 (pg. 3-16) | |
| Review 3-3 (pg. 3-17) | |
| Balance Sheet Analysis with an Operating Focus (pg. 3-17) | |
| Return on Net Operating Assets (RNOA) (pg. 3-18) | |
| Net Operating Assets (NOA) (pg. 3-18) | |
| Net Nonoperating Obligations (NNO) (pg. 3-20) | |
| Review 3-4 (pg. 3-23) | |
| Income Statement Analysis with an Operating Focus (pg. 3-23) | |
| Operating Line Items on the Income Statement (pg. 3-24) | |
| Nonoperating Line Items on the Income Statement (pg. 3-24) | |
| Net Nonoperating Expense (NNE) (pg. 3-26) | |
| Review 3-5 (pg. 3-27) | |
| Return on Net Operating Assets (RNOA) (pg. 3-27) | |
| Review 3-6 (pg. 3-29) | |
| RNOA Disaggregation into Margin and Turnover (pg. 3-30) | |
| Net Operating Profit Margin (pg. 3-30) | |
| Net Operating Asset Turnover (pg. 3-30) | |
| Trade-Off between Margin and Turnover (pg. 3-31) | |
| Analyst Adjustments 3.4 (pg. 3-32) | |
| Review 3-7 (pg. 3-33) | |
| Analyzing Global Reports (pg. 3-34) | |
| Appendix 3A: Operating versus Nonoperating Classification (pg. 3-34) | |
| Appendix 3B: Nonoperating Return Component of ROE (pg. 3-35) | |
| Nonoperating Return-With Net Nonoperating Assets (pg. 3-37) | |
| Review 3-8 (pg. 3-39) | |
| Appendix 3C: Vertical and Horizontal Analysis (pg. 3-39) | |
| Limitations of Ratio Analysis (pg. 3-41) | |
| Review 3-9 (pg. 3-42) | |
| Guidance Answer (pg. 3-42) | |
| Multiple Choice (pg. 3-42) | |
| Questions (pg. 3-44) | |
| Mini Exercises (pg. 3-45) | |
| Exercises (pg. 3-47) | |
| Problems (pg. 3-53) | |
| Analysis Discussion Points (pg. 3-61) | |
| Data Analytics (pg. 3-61) | |
| Ongoing Analysis Project (pg. 3-61) | |
| Solutions to Reviews (pg. 3-62) | |
| Module 4 Credit Risk Analysis and Interpretation (pg. 4-1) | |
| Market for Credit (pg. 4-3) | |
| Demand for Credit (pg. 4-3) | |
| Supply of Credit (pg. 4-4) | |
| Review 4-1 (pg. 4-6) | |
| Credit Risk Analysis Process (pg. 4-6) | |
| Information for Credit Risk Analysis (pg. 4-6) | |
| Chance of Default (pg. 4-7) | |
| Loss Given Default (pg. 4-8) | |
| Review 4-2 (pg. 4-11) | |
| Measuring Credit Risk (pg. 4-11) | |
| Adjusting Financial Information (pg. 4-11) | |
| Analyst Adjustments 4.1 (pg. 4-12) | |
| Overarching Approach to Credit Analysis (pg. 4-12) | |
| Capital Structure (Solvency) Analysis (pg. 4-13) | |
| Coverage Analysis (pg. 4-15) | |
| Liquidity Analysis (pg. 4-19) | |
| Review 4-3 (pg. 4-20) | |
| Credit Ratings (pg. 4-22) | |
| Importance of Credit Ratings (pg. 4-23) | |
| How Credit Ratings Are Determined (pg. 4-24) | |
| Review 4-4 (pg. 4-33) | |
| Predicting Bankruptcy Risk (pg. 4-33) | |
| Review 4-5 lo4-5 (pg. 4-34) | |
| Appendix 4A: Verizon Financial Statements and Debt and Lease Notes (pg. 4-35) | |
| Appendix 4B: Approaches of Other Credit Raters (pg. 4-39) | |
| Moody’s Investors Service (pg. 4-39) | |
| Fitch Ratings (pg. 4-40) | |
| Guidance Answers (pg. 4-40) | |
| Multiple Choice (pg. 4-41) | |
| Questions (pg. 4-42) | |
| Mini Exercises (pg. 4-42) | |
| Exercises (pg. 4-44) | |
| Problems (pg. 4-49) | |
| Analysis Discussion Point (pg. 4-56) | |
| Data Analytics (pg. 4-56) | |
| Ongoing Analysis Project (pg. 4-56) | |
| Solutions to Reviews (pg. 4-56) | |
| Module 5: Revenue Recognition and Operating Income (pg. 5-1) | |
| Analyzing Revenue (pg. 5-3) | |
| Revenue Recognition Rules (pg. 5-4) | |
| Complications of Revenue Recognition (pg. 5-5) | |
| Performance Obligations Satisfied Over Time (pg. 5-6) | |
| Performance Obligations Satisfied Over Time (pg. 5-6) | |
| Review 5-1 lo5-1 (pg. 5-8) | |
| Analyzing Sales Allowances (pg. 5-9) | |
| Accounting for Sales Allowances (pg. 5-9) | |
| Reporting Sales Allowances (pg. 5-10) | |
| Analysis of Sales Allowances (pg. 5-10) | |
| Analyst Adjustments 5.1 (pg. 5-11) | |
| Review 5-2 lo5-2 (pg. 5-12) | |
| Analyzing Unearned (Deferred) Revenue (pg. 5-13) | |
| Review 5-3 lo5-3 (pg. 5-15) | |
| Foreign Currency Effects on Revenue, Expenses, and Cash Flow (pg. 5-15) | |
| Foreign Currency and Cash Flows (pg. 5-16) | |
| Foreign Currency and Income (pg. 5-16) | |
| Foreign Currency and Future Results (pg. 5-17) | |
| Review 5-4 lo5-4 (pg. 5-17) | |
| Analyzing Accounts Receivable (pg. 5-18) | |
| Aging Analysis of Receivables (pg. 5-18) | |
| Accounting for Accounts Receivable (pg. 5-19) | |
| Analysis of Accounts Receivable-Magnitude (pg. 5-20) | |
| Analysis of Accounts Receivable-Quality (pg. 5-22) | |
| Analyst Adjustments 5.2 (pg. 5-23) | |
| Review 5-5 lo5-5 (pg. 5-24) | |
| Analyzing Expenses and Losses (pg. 5-25) | |
| Analyze Deductions from Income (pg. 5-25) | |
| Analyze Research and Development Expense (pg. 5-26) | |
| Provision (Benefit) for Taxes on Income (pg. 5-30) | |
| Analyze Discontinued Operations (pg. 5-31) | |
| Analyst Adjustments 5.3 (pg. 5-33) | |
| Review 5-6 lo5-6 (pg. 5-33) | |
| Pro Forma and Non-GAAP Disclosures (pg. 5-34) | |
| Regulation G Reconciliation (pg. 5-34) | |
| SEC Warnings about Pro Forma Numbers (pg. 5-35) | |
| Disclosures and Market Assessments (pg. 5-36) | |
| Review 5-7 (pg. 5-37) | |
| Analyzing Global Reports (pg. 5-38) | |
| Guidance Answer (pg. 5-39) | |
| Multiple Choice (pg. 5-39) | |
| Questions (pg. 5-40) | |
| Mini Exercises (pg. 5-40) | |
| Exercises (pg. 5-45) | |
| Problems (pg. 5-53) | |
| Analysis Discussion Points (pg. 5-61) | |
| Data Analytics (pg. 5-61) | |
| Ongoing Analysis Project (pg. 5-61) | |
| Solutions to Reviews (pg. 5-61) | |
| Module 6: Asset Recognition and Operating Assets (pg. 6-1) | |
| Analyzing Inventory-Costing Methods (pg. 6-3) | |
| First-In, First-Out (FIFO) (pg. 6-4) | |
| Last-In, First-Out (LIFO) (pg. 6-5) | |
| Average Cost (AC) (pg. 6-5) | |
| Financial Statement Effects of Inventory Costing (pg. 6-7) | |
| Analyzing Inventory-Reporting (pg. 6-9) | |
| Lower of Cost or Market (LCM) (pg. 6-9) | |
| LIFO Reserve Adjustments to Financial Statements (pg. 6-10) | |
| LIFO Liquidations (pg. 6-11) | |
| Analyst Adjustments 6.1 (pg. 6-12) | |
| Review 6-2 (pg. 6-13) | |
| Analyzing Inventory-Tools (pg. 6-13) | |
| Gross Profit Analysis (pg. 6-13) | |
| Days Inventory Outstanding and Inventory Turnover (pg. 6-15) | |
| Days Payable Outstanding (pg. 6-17) | |
| Cash Conversion Cycle (pg. 6-18) | |
| Review 6-3 (pg. 6-19) | |
| Analyzing PP&E Assets-Capitalization and Depreciation (pg. 6-20) | |
| Plant and Equipment (pg. 6-20) | |
| Research and Development Facilities and Equipment (pg. 6-22) | |
| Review 6-4 (pg. 6-22) | |
| Analyzing PP&E Assets-Sales, Impairments, and Restructuring (pg. 6-23) | |
| Asset Sales (pg. 6-23) | |
| Analyst Adjustments 6.2 (pg. 6-23) | |
| Asset Impairments (pg. 6-24) | |
| Restructuring Costs (pg. 6-25) | |
| Analyst Adjustments 6.3 (pg. 6-28) | |
| Review 6-5 (pg. 6-29) | |
| Analyzing PP&E Assets-Tools (pg. 6-30) | |
| PP&E Turnover (pg. 6-30) | |
| Analyst Adjustments 6.4 (pg. 6-31) | |
| PP&E Useful Life (pg. 6-32) | |
| PP&E Percent Used Up (pg. 6-32) | |
| Review 6-6 (pg. 6-33) | |
| Analyzing Intangible Assets (pg. 6-33) | |
| Types and Valuation of Intangible Assets (pg. 6-35) | |
| Valuation Models for Intangible Assets (pg. 6-37) | |
| Accounting for Goodwill (pg. 6-37) | |
| Analysis of Intangible Asset Impairment Charges (pg. 6-38) | |
| Analyst Adjustments 6.5 (pg. 6-39) | |
| Review 6-7 (pg. 6-40) | |
| Analyzing Global Reports (pg. 6-41) | |
| Guidance Answers (pg. 6-42) | |
| Multiple Choice (pg. 6-43) | |
| Questions (pg. 6-45) | |
| Mini Exercises (pg. 6-46) | |
| Exercises (pg. 6-49) | |
| Problems (pg. 6-55) | |
| Analysis Discussion Points (pg. 6-61) | |
| Data Analytics (pg. 6-61) | |
| Ongoing Analysis Project (pg. 6-61) | |
| Solutions to Reviews (pg. 6-61) | |
| Module 7: Liability Recognition and Nonowner Financing (pg. 7-1) | |
| Analyzing Accrued Liabilities (pg. 7-3) | |
| Accrued Liabilities Defined (pg. 7-3) | |
| Accruals for Contingent Liabilities Defined (pg. 7-5) | |
| Analyst Adjustments 7.1 (pg. 7-7) | |
| Review 7-1 (pg. 7-8) | |
| Analyzing Short-Term Debt (pg. 7-8) | |
| Reporting for Short-Term Debt (pg. 7-9) | |
| Current Maturities of Long-Term Debt (pg. 7-9) | |
| Analyzing Long-Term Debt-Pricing (pg. 7-10) | |
| Pricing of Bonds Issued at Par (pg. 7-11) | |
| Pricing of Bonds Issued at a Discount (pg. 7-12) | |
| Pricing of Bonds Issued at a Premium (pg. 7-12) | |
| Effective Cost of Debt (pg. 7-13) | |
| Review 7-3 (pg. 7-15) | |
| Analyzing Long-Term Debt-Reporting (pg. 7-15) | |
| Balance Sheet Reporting (pg. 7-15) | |
| Income Statement Reporting (pg. 7-17) | |
| Financial Statement Effects of Bond Repurchase (pg. 7-18) | |
| Fair Value Disclosures (pg. 7-19) | |
| Review 7-4 (pg. 7-20) | |
| Analyzing Global Reports (pg. 7-20) | |
| Appendix 7A: Time Value of Money (pg. 7-21) | |
| Present Value Concepts (pg. 7-21) | |
| Future Value Concepts (pg. 7-25) | |
| Appendix 7B: Amortization of Debt (pg. 7-26) | |
| Amortization of Discount (pg. 7-26) | |
| Amortization of Premium (pg. 7-27) | |
| Multiple Choice (pg. 7-28) | |
| Questions (pg. 7-29) | |
| Mini Exercises (pg. 7-29) | |
| Exercises (pg. 7-32) | |
| Problems (pg. 7-36) | |
| Analysis Discussion Points (pg. 7-39) | |
| Data Analytics (pg. 7-39) | |
| Ongoing Analysis Project (pg. 7-40) | |
| Solutions to Reviews (pg. 7-40) | |
| Module 8: Equity Recognition and Owner Financing (pg. 8-1) | |
| Analyzing Stockholders’ Equity and Classes of Stock (pg. 8-3) | |
| Stockholders’ Equity Accounts (pg. 8-3) | |
| Statement of Stockholders’ Equity (pg. 8-6) | |
| Preferred Stock (pg. 8-7) | |
| Common Stock (pg. 8-8) | |
| Analyst Adjustments 8.1 (pg. 8-9) | |
| Review 8-1 (pg. 8-10) | |
| Analyzing Stock Transactions (pg. 8-10) | |
| Stock Issuance (pg. 8-10) | |
| Stock Repurchase (pg. 8-11) | |
| Review 8-2 (pg. 8-15) | |
| Analyzing Stock-Based Compensation (pg. 8-16) | |
| Characteristics of Stock-Based Compensation Plans (pg. 8-16) | |
| Analysis of Stock-Based Compensation Plans (pg. 8-16) | |
| Accounting for Stock-Based Compensation (pg. 8-17) | |
| Note Disclosures for Stock-Based Compensation (pg. 8-18) | |
| Review 8-3 (pg. 8-19) | |
| Analyzing Dividends and Stock Splits (pg. 8-19) | |
| Cash Dividend Disclosures (pg. 8-20) | |
| Dividend Payout and Yield (pg. 8-20) | |
| Cash Dividends Financial Effects (pg. 8-20) | |
| Stock Split (pg. 8-21) | |
| Review 8-4 (pg. 8-21) | |
| Analyzing Accumulated Other Comprehensive Income (AOCI) (pg. 8-22) | |
| AOCI Components (pg. 8-22) | |
| AOCI Disclosures and Interpretation (pg. 8-22) | |
| Analyst Adjustments 8.3 (pg. 8-25) | |
| Review 8-5 (pg. 8-26) | |
| Analyzing Earnings per Share (EPS) (pg. 8-26) | |
| Review 8-6 (pg. 8-28) | |
| Analyzing Global Reports (pg. 8-28) | |
| Appendix 8A: Stock-Based Compensation: Reporting and Analyzing (pg. 8-29) | |
| Employee Stock Purchase Plans (ESPP) (pg. 8-29) | |
| Stock Awards (pg. 8-29) | |
| Stock Options (pg. 8-29) | |
| Stock Appreciation Rights (SAR) (pg. 8-30) | |
| Summary of Share-Based Compensation (pg. 8-30) | |
| Analysis Implications (pg. 8-30) | |
| Guidance Answer (pg. 8-31) | |
| Multiple Choice (pg. 8-31) | |
| Questions (pg. 8-33) | |
| Mini Exercises (pg. 8-33) | |
| Exercises (pg. 8-37) | |
| Problems (pg. 8-41) | |
| Data Analytics (pg. 8-46) | |
| Ongoing Analysis Project (pg. 8-46) | |
| Solutions to Reviews (pg. 8-46) | |
| Module 9: Intercorporate Investments (pg. 9-1) | |
| Analyzing Intercorporate Investments (pg. 9-3) | |
| Passive Investments in Equity Securities (pg. 9-4) | |
| Investments in Debt Securities (pg. 9-8) | |
| Review 9-1 (pg. 9-11) | |
| Analyzing Equity Investments with Significant Influence (pg. 9-12) | |
| Investments with Significant Influence (pg. 9-12) | |
| Equity Method Accounting and ROE Effects (pg. 9-14) | |
| Review 9-2 (pg. 9-17) | |
| Analyzing Equity Investments with Control (pg. 9-17) | |
| Investments with Control (pg. 9-18) | |
| Analyst Adjustments 9.1 (pg. 9-26) | |
| Review 9-3 (pg. 9-27) | |
| Analyzing Global Reports (pg. 9-28) | |
| Appendix 9A: Analyzing Derivatives (pg. 9-29) | |
| Analysis of Derivatives (pg. 9-30) | |
| Review 9-4 (pg. 9-31) | |
| Appendix 9B: Analyzing Equity Carve-Outs (pg. 9-32) | |
| Analysis of Equity Carve-Outs (pg. 9-35) | |
| Review 9-5 (pg. 9-36) | |
| Guidance Answer (pg. 9-36) | |
| Multiple Choice (pg. 9-37) | |
| Questions (pg. 9-37) | |
| Mini Exercises (pg. 9-38) | |
| Exercises (pg. 9-41) | |
| Problems (pg. 9-46) | |
| Analysis Discussion Point (pg. 9-49) | |
| Data Analytics (pg. 9-49) | |
| Ongoing Analysis Project (pg. 9-49) | |
| Solutions to Reviews (pg. 9-50) | |
| Module 10: Analyzing Leases, Pensions, and Taxes (pg. 10-1) | |
| Analyzing Leases (pg. 10-3) | |
| Lessee Reporting Example-Microsoft (pg. 10-3) | |
| Lease Accounting (pg. 10-5) | |
| Summary of Lease Accounting and Reporting (pg. 10-8) | |
| Analyst Adjustments 10.1 (pg. 10-9) | |
| Review 10-1 (pg. 10-9) | |
| Analyzing Pensions (pg. 10-10) | |
| Defined Benefit Plans on the Balance Sheet (pg. 10-11) | |
| Analysis Issue-Sufficiency of Plan Assets (pg. 10-12) | |
| Fair Value Accounting for Pensions (pg. 10-18) | |
| Note Disclosure-Key Assumptions (pg. 10-20) | |
| Analysis Implications (pg. 10-20) | |
| Analyst Adjustments 10.2 (pg. 10-21) | |
| Other Post-Employment Benefits (OPEB) (pg. 10-23) | |
| Review 10-2 (pg. 10-24) | |
| Analyzing Income Taxes (pg. 10-25) | |
| Timing Differences Create Deferred Tax Assets and Deferred Tax Liabilities (pg. 10-25) | |
| Disclosures for Income Taxes (pg. 10-30) | |
| Analysis of Income Tax Disclosures (pg. 10-31) | |
| Expanded Explanation of Deferred Taxes (pg. 10-32) | |
| Analyst Adjustments 10.3 (pg. 10-35) | |
| Review 10-3 (pg. 10-35) | |
| Analyzing Global Reports (pg. 10-37) | |
| Appendix 10A: Lease Accounting Example- Finance and Operating Leases (pg. 10-37) | |
| Multiple Choice (pg. 10-38) | |
| Questions (pg. 10-40) | |
| Mini Exercises (pg. 10-40) | |
| Exercises (pg. 10-46) | |
| Problems (pg. 10-49) | |
| Data Analytics (pg. 10-56) | |
| Ongoing Analysis Project (pg. 10-56) | |
| Solutions to Reviews (pg. 10-56) | |
| Module 11: Financial Statement Forecasting (pg. 11-1) | |
| Forecasting Process (pg. 11-4) | |
| Company Guidance (pg. 11-6) | |
| Review 11-1 (pg. 11-7) | |
| Forecasting the Income Statement (pg. 11-8) | |
| Review 11-2 (pg. 11-13) | |
| Forecasting the Balance Sheet (pg. 11-14) | |
| Review 11-3 (pg. 11-18) | |
| Building Forecasts from Segment Disclosures (pg. 11-19) | |
| Segment Data (pg. 11-19) | |
| Quarterly Data (pg. 11-24) | |
| Review 11-4 (pg. 11-24) | |
| Appendix 11A: Forecasting the Statement of Cash Flows (pg. 11-25) | |
| Review 11-5 (pg. 11-26) | |
| Appendix 11B: Multiyear Forecasting with Target Cash and Debt Financing (pg. 11-27) | |
| Income Statement (pg. 11-28) | |
| Balance Sheet (pg. 11-28) | |
| Forecasting Sensitivity Analysis (pg. 11-30) | |
| Review 11-6 (pg. 11-31) | |
| Appendix 11C: Parsimonious Method for Forecasting NOPAT and NOA (pg. 11-31) | |
| Review 11-7 (pg. 11-32) | |
| Appendix 11D: Morgan Stanley’s Forecast Report on Procter & Gamble (pg. 11-32) | |
| Multiple Choice (pg. 11-40) | |
| Questions (pg. 11-41) | |
| Mini Exercises (pg. 11-41) | |
| Exercises (pg. 11-47) | |
| Problems (pg. 11-54) | |
| Data Analytics (pg. 11-62) | |
| Ongoing Analysis Project (pg. 11-62) | |
| Solutions to Reviews (pg. 11-62) | |
| Module 12: Cost of Capital and Valuation Basics (pg. 12-1) | |
| Basics of Valuation (pg. 12-3) | |
| Payoffs from Equity and Debt Instruments (pg. 12-4) | |
| Steps in Stock Valuation (pg. 12-4) | |
| Intrinsic Value (pg. 12-5) | |
| Valuation of a Debt Instrument (pg. 12-6) | |
| Valuation of an Equity Instrument (pg. 12-6) | |
| Estimating Cost of Capital (pg. 12-7) | |
| Diversifiable and Non-Diversifiable Risk (pg. 12-8) | |
| Review 12-1 (pg. 12-8) | |
| Cost of Equity Capital Using CAPM (pg. 12-9) | |
| Cost of Equity Capital Using a Multi-Factor Model (pg. 12-10) | |
| Review 12-2 (pg. 12-11) | |
| Cost of Debt Capital (pg. 12-11) | |
| Review 12-3 (pg. 12-13) | |
| Weighted Average Cost of Capital (pg. 12-13) | |
| Review 12-4 (pg. 12-15) | |
| Dividend Discount Model (pg. 12-15) | |
| Recursive Process of Valuation (pg. 12-15) | |
| Framework of Dividend Discount Model (pg. 12-16) | |
| DDM with Constant Perpetuity (pg. 12-16) | |
| Review 12-5 (pg. 12-17) | |
| DDM with Increasing Perpetuity (pg. 12-17) | |
| Applying the Dividend Discount Model (pg. 12-18) | |
| Review 12-6 (pg. 12-20) | |
| Appendix 12A: Estimating Cost of Equity Capital (pg. 12-20) | |
| Guidance Answer (pg. 12-25) | |
| Multiple Choice (pg. 12-25) | |
| Questions (pg. 12-25) | |
| Mini Exercises (pg. 12-26) | |
| Exercises (pg. 12-27) | |
| Problems (pg. 12-28) | |
| Analysis Discussion Points (pg. 12-32) | |
| Data Analytics (pg. 12-32) | |
| Ongoing Analysis Project (pg. 12-32) | |
| Solutions to Reviews (pg. 12-32) | |
| Module 13: Cash-Flow-Based Valuation (pg. 13-1) | |
| Equity Valuation Models (pg. 13-3) | |
| Dividend Discount Model (pg. 13-3) | |
| Discounted Cash Flow Model (pg. 13-4) | |
| Residual Operating Income Model (pg. 13-4) | |
| Model Equivalency (pg. 13-4) | |
| Valuation Model Inputs (pg. 13-4) | |
| Review 13-1 (pg. 13-6) | |
| Discounted Cash Flow (DCF) Model (pg. 13-6) | |
| DCF Model Structure (pg. 13-6) | |
| Steps in Applying the DCF Model (pg. 13-8) | |
| Illustrating the DCF Model (pg. 13-8) | |
| Review 13-2 (pg. 13-10) | |
| Sensitivity Analysis of the Model (pg. 13-11) | |
| Reverse Engineering of the Model (pg. 13-13) | |
| REVIEW 13-3 (pg. 13-15) | |
| Analyzing Global Reports (pg. 13-15) | |
| Appendix 13A: P&G Financial Statements (pg. 13-16) | |
| Appendix 13B: Derivation of Free Cash Flow Formula (pg. 13-18) | |
| Appendix 13C: Deutsche Bank Valuation of P&G (pg. 13-18) | |
| Guidance Answer (pg. 13-30) | |
| Multiple Choice (pg. 13-30) | |
| Questions (pg. 13-31) | |
| Mini Exercises (pg. 13-31) | |
| Exercises (pg. 13-34) | |
| Problems (pg. 13-36) | |
| Analysis Discussion Point (pg. 13-40) | |
| Data Analytics (pg. 13-41) | |
| Ongoing Analysis Project (pg. 13-41) | |
| Solutions to Reviews (pg. 13-41) | |
| Module 14: Operating-Income-Based Valuation (pg. 14-1) | |
| Equity Valuation Models (pg. 14-3) | |
| Dividend Discount Model (pg. 14-3) | |
| Discounted Cash Flow Model (pg. 14-3) | |
| Residual Operating Income Model (pg. 14-4) | |
| Model Equivalency (pg. 14-4) | |
| Valuation Model Inputs (pg. 14-4) | |
| Review 14-1 (pg. 14-6) | |
| Residual Operating Income (ROPI) Model (pg. 14-6) | |
| ROPI Model Structure (pg. 14-6) | |
| Steps in Applying the ROPI Model (pg. 14-7) | |
| Illustrating the ROPI Model (pg. 14-8) | |
| Sensitivity Analysis of the Model (pg. 14-10) | |
| Reverse Engineering of the Model (pg. 14-10) | |
| Review 14-2 (pg. 14-11) | |
| Steady State in Valuation (pg. 14-12) | |
| Multi-Year Forecast Precision (pg. 14-12) | |
| Achieving Steady State (pg. 14-13) | |
| Forecasting Steady State-An Illustration (pg. 14-13) | |
| Review 14-3 (pg. 14-15) | |
| Managerial Insights from the ROPI Model (pg. 14-16) | |
| Management Focus on Improved Efficiency (pg. 14-16) | |
| Management Focus on Improved Profitability (pg. 14-17) | |
| Assessment of Valuation Models (pg. 14-17) | |
| Analyzing Global Reports (pg. 14-18) | |
| Review 14-4 (pg. 14-18) | |
| Appendix 14A: P&G Financial Statements (pg. 14-19) | |
| Guidance Answer (pg. 14-21) | |
| Multiple Choice (pg. 14-21) | |
| Questions (pg. 14-22) | |
| Mini Exercises (pg. 14-23) | |
| Exercises (pg. 14-24) | |
| Problems (pg. 14-28) | |
| Analysis Discussion Point (pg. 14-32) | |
| Data Analytics (pg. 14-32) | |
| Ongoing Analysis Project (pg. 14-32) | |
| Solutions to Reviews (pg. 14-33) | |
| Module 15: Market-Based Valuation (pg. 15-1) | |
| Valuation Model Using Market Multiples (pg. 15-3) | |
| Application of Market Multiples (pg. 15-4) | |
| Valuation Using Balance Sheet Multiples (pg. 15-5) | |
| Valuation Using a Net Operating Asset Multiple (pg. 15-5) | |
| Valuation Using a Book Value Multiple (pg. 15-6) | |
| Review 15-1 (pg. 15-8) | |
| Valuation Using Income Statement Multiples (pg. 15-8) | |
| Valuation Using a NOPAT Multiple (pg. 15-9) | |
| Valuation Using a Net Income Multiple (pg. 15-9) | |
| Valuation Using Industry-Based Multiples (pg. 15-10) | |
| Combining Estimates from Differing Multiples (pg. 15-11) | |
| Review 15-2 (pg. 15-11) | |
| Selecting Comparables for Market Multiples (pg. 15-12) | |
| Deriving Price-to-Book (pg. 15-12) | |
| PB Ratios Based on Profitability, Growth, and Risk (pg. 15-13) | |
| Deriving Price-to-Earnings (pg. 15-16) | |
| PE Ratios Based on Profitability, Growth, and Risk (pg. 15-16) | |
| Review 15-3 (pg. 15-17) | |
| Interpreting and Reverse Engineering Market Multiples (pg. 15-18) | |
| Reverse Engineering the PB Ratio (pg. 15-18) | |
| Valuation Multiples and Fundamental Analysis (pg. 15-19) | |
| Review 15-4 (pg. 15-20) | |
| Guidance Answer (pg. 15-21) | |
| Multiple Choice (pg. 15-21) | |
| Questions (pg. 15-21) | |
| Mini Exercises (pg. 15-22) | |
| Exercises (pg. 15-24) | |
| Problems (pg. 15-28) | |
| Analysis Discussion Points (pg. 15-31) | |
| Data Analytics (pg. 15-33) | |
| Ongoing Analysis Project (pg. 15-33) | |
| Solutions to Reviews (pg. 15-33) | |
| Appendix A: Compound Interest Tables (pg. A-1) | |
| Appendix B: Computing and Analyzing Cash Flows (pg. B-1) | |
| Framework for Statement of Cash Flows (pg. B-3) | |
| Relation Among Financial Statements (pg. B-3) | |
| Statement of Cash Flows Format (pg. B-4) | |
| Operating Activities (pg. B-6) | |
| Review B-1 (pg. B-8) | |
| Cash Flow from Operating Activities (pg. B-9) | |
| Computing Net Cash Flow from Operating Activities (pg. B-10) | |
| Java House Case Illustration (pg. B-11) | |
| Review B-2 (pg. B-13) | |
| Cash Flows from Investing Activities (pg. B-14) | |
| Analyze Remaining Noncash Assets (pg. B-14) | |
| Java House Case Illustration (pg. B-14) | |
| Review B-3 (pg. B-15) | |
| Cash Flows from Financing Activities (pg. B-16) | |
| Analyze Remaining Liabilities and Equity (pg. B-16) | |
| Java House Case Illustration (pg. B-16) | |
| Review B-4 (pg. B-17) | |
| Supplemental Disclosures for Indirect Method (pg. B-17) | |
| Review B-5 (pg. B-18) | |
| Interpreting and Analyzing CASH FLOWS (pg. B-19) | |
| Overarching Principles (pg. B-19) | |
| Cash Flows as a Percent of Revenues (pg. B-21) | |
| Quality of Earnings (pg. B-22) | |
| Cash Flow Patterns (pg. B-25) | |
| Review B-6 (pg. B-28) | |
| Ratio Analyses of Cash Flows (pg. B-28) | |
| Free Cash Flow (pg. B-29) | |
| Review B-7 (pg. B-30) | |
| Appendix BB: Direct Method Reporting for Statement of Cash Flows (pg. B-31) | |
| We next explain and illustrate the process of converting Java House’s rev (pg. B-32) | |
| Cash Flows from Investing and Financing Activities (pg. B-33) | |
| Supplemental Disclosures (pg. B-33) | |
| Review B-8 (pg. B-33) | |
| Guidance Answer (pg. B-34) | |
| Multiple Choice (pg. B-34) | |
| Questions (pg. B-35) | |
| Mini Exercises (pg. B-36) | |
| Exercises (pg. B-39) | |
| Problems (pg. B-43) | |
| Data Analytics (pg. B-50) | |
| Solutions to Reviews (pg. B-50) | |
| Appendix C: Comprehensive Case (pg. C-1) | |
| Appendix D: Data Analytics and Blockchain Technology (pg. D-1) | |
| Data Analytics (pg. D-2) | |
| Big Data (pg. D-2) | |
| Types of Data Analytics (pg. D-2) | |
| Data Analytics in the Accounting Profession (pg. D-3) | |
| Data Analytic Tools (pg. D-5) | |
| Data Visualization (pg. D-6) | |
| Blockchain Technology (pg. D-10) | |
| Appendix E: Chart of Accounts with Acronyms (pg. E-1) | |
| Index (pg. I-1) | |
Peter D. Easton
Peter D. Easton is an expert in accounting and valuation and holds the Notre Dame Alumni Chair in Accountancy in the Mendoza College of Business.
Professor Easton’s expertise is widely recognized by the academic research community and by the legal community. Professor Easton frequently serves as a consultant on accounting and valuation issues in federal and state courts.
Professor Easton holds undergraduate degrees from the University of Adelaide and the University of South Australia. He holds a graduate degree from the University of New England and a PhD in Business Administration (majoring in accounting and finance) from the University of California, Berkeley.
Professor Easton’s research on corporate valuation has been published in the Journal of Accounting and Economics, Journal of Accounting Research, The Accounting Review, Contemporary Accounting Research, Review of Accounting Studies, and Journal of Business Finance and Accounting.
Professor Easton has served as an associate editor for 11 leading accounting journals and he is currently an associate editor for the Journal of Accounting Research, Journal of Business Finance and Accounting, and Journal of Accounting, Auditing, and Finance. He is an editor of the Review of Accounting Studies.
Professor Easton has held appointments at the University of Chicago, the University of California at Berkeley, Ohio State University, Macquarie University, the Australian Graduate School of Management, the University of Melbourne, Tilburg University, National University of Singapore, Seoul National University, and Nyenrode University. He is the recipient of numerous awards for excellence in teaching and in research. Professor Easton regularly teaches accounting analysis and security valuation to MBAs. In addition, Professor Easton has taught managerial accounting at the graduate level.
Mary Lea McAnally
Mary Lea McAnally is the Philip Ljundahl Professor of Accounting at the Mays Business School at Texas A&M. She obtained her Ph.D. from Stanford University and B. Comm. from the University of Alberta.
She worked as a Chartered Accountant (in Canada) and is a Certified Internal Auditor. Prior to arriving at Texas A&M in 2002, Professor McAnally held positions at University of Texas at Austin, Canadian National Railways, and Dunwoody and Company.
Her research interests include accounting and disclosure in regulated environments, executive compensation, and accounting for risk. She has published articles in the leading academic journals including Journal of Accounting and Economics, Journal of Accounting Research, The Accounting Review, Review of Accounting Studies, and Contemporary Accounting Research. Professor McAnally received the Mays Business School Research Achievement Award in 2005. She was Associate Editor at Accounting Horizons, served on the editorial board of Contemporary Accounting Research, and was Guest Editor for the MBA-teaching volume of Issues in Accounting Education. She is active in the American Accounting Association and its FARS section.
At Texas A&M, Professor McAnally teaches financial reporting, analysis, and valuation in the full-time, Professional, and Executive MBA programs. Through the Mays Center for Executive Development, she works with corporate clients. She has also taught at University of Alberta, University of Calgary, IMADEC (in Austria) and at the Indian School of Business at the Hyderabad and Mohali campuses. She has received numerous faculty-determined and student-initiated teaching awards at the MBA and executive levels. Those awards include the Beazley Award, the Trammell Foundation Award, the MBA Teaching Award (multiple times), the MBA Association Distinguished Faculty Award (three times), the Award for Outstanding and Memorable Faculty Member, and the Distinguished Achievement Award.
Steven S. Crawford
Steven S. Crawford is an associate professor at the Bauer College of Business at the University of Houston.
Professor Crawford received his bachelor’s and master’s degrees in accounting from Brigham Young University and MBA and PhD degrees from the University of Chicago. Steve was an assistant professor at Rice University before joining the University of Houston in 2014.
He teaches financial statement analysis and valuation in the masters of accountancy and MBA programs. He has also taught executive education courses at the University of Houston. He has received several teaching awards.
Professor Crawford has done research on a variety of topics related to financial analysts, financial markets, and disclosure. He has published research in a variety of accounting and finance journals including The Accounting Review, Review of Accounting Studies, Contemporary Accounting Research, Management Science, Journal of Financial and Quantitative Analysis, Financial Analysts Journal, and Journal of Portfolio Management.
Gregory A. Sommers
Gregory A. Sommers is Director of the Master of Science in Accounting program and Professor of Practice in Accounting in the Edwin L. Cox School of Business at Southern Methodist University.
He holds an undergraduate degree in accounting from Fresno Pacific University and a PhD in Accounting and Management Information Systems from The Ohio State University. Professor Sommers is a Certified Public Accountant who practiced in and continues to be licensed in California.
Professor Sommers’ research focuses on market-based empirical studies of the relations between currently available accounting data, expectations of future accounting data, expected cost of capital and valuation. His research has been published in Journal of Accounting Research and Journal of Business, Finance, and Accounting. Professor Sommers serves on the editorial board of Review of Accounting Studies.
Professor Sommers teaches financial accounting, including international accounting, in the undergraduate and graduate programs as well as in executive education at Southern Methodist University. He has taught financial statement analysis and valuation for over ten years at the graduate level and his teaching materials were previously utilized as resources for another textbook in this area. Professor Sommers’ teaching has earned him numerous awards including Outstanding MBA Teaching as well as recognition from student organizations.
Professor Sommers is an active member of the American Accounting Association and its Financial Accounting and Reporting Section. He has served as chairman of the Trueblood Seminar for Professors sponsored by Deloitte. Professor Sommers is recognized as an expert in the areas of financial reporting, financial analysis, estimation of cost of capital, and business valuation.
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