Analysis of Financial Statements 3e

Preface xi
<p>About the Authors xiii</p>
<p>PART ONE The Basics 1</p>
<p>CHAPTER 1 Introduction 3</p>
<p>What Is Financial Analysis? 4</p>
<p>Where Do We Find the Financial Information? 8</p>
<p>Who Gets What Type of Information and When? 10</p>
<p>What Does Sarbanes–Oxley Mean to Companies and Investors? 28</p>
<p>What Does the Dodd–Frank Act Mean for Companies and Investors? 32</p>
<p>Summary 34</p>
<p>Review 35</p>
<p>CHAPTER 2 Financial Statements 37</p>
<p>Accounting Principles: What Are They? 37</p>
<p>What Do the Basic Financial Statements Tell Us? 39</p>
<p>Accounting Flexibility 56</p>
<p>How Does Accounting in the United States Differ from Accounting Outside of the United States? 58</p>
<p>Summary 59</p>
<p>Review 60</p>
<p>CHAPTER 3 The Quality of Financial Information 63</p>
<p>It s All in the Timing 65</p>
<p>Too Many Choices? 76</p>
<p>So What s Their Business? 86</p>
<p>Restatements and Financial Analysis 87</p>
<p>Tell–Tale Signs 90</p>
<p>Summary 92</p>
<p>Review 95</p>
<p>PART TWO Analysis of Financial Statements 99</p>
<p>CHAPTER 4 Financial Analysis 101</p>
<p>What Are Financial Ratios and How Do We Use Them? 102</p>
<p>What Are the Different Types of Financial Ratios? 105</p>
<p>Analysis of Return–on–Investment Ratios 122</p>
<p>How Can We Use Common–Size Analysis to Analyze Financial Statements? 127</p>
<p>Integrated Ratio Analysis 130</p>
<p>What Are the Pitfalls and Pratfalls of Financial Ratio Analysis? 137</p>
<p>Summary 143</p>
<p>Review 144</p>
<p>CHAPTER 5 Equity Analysis 147</p>
<p>Earnings 147</p>
<p>Price–Earnings Ratio 158</p>
<p>Dividends 161</p>
<p>Other Fundamentals 173</p>
<p>Book–to–Market Ratio 175</p>
<p>Summary 178</p>
<p>Review 179</p>
<p>CHAPTER 6 Cash Flow Analysis 181</p>
<p>Measures of Cash Flow 181</p>
<p>Cash Flows and the Statement of Cash Flows 184</p>
<p>Free Cash Flow 189</p>
<p>The Usefulness of Cash Flows in Financial Analysis 196</p>
<p>Summary 202</p>
<p>Review 203</p>
<p>PART THREE Applying Financial Analysis 205</p>
<p>CHAPTER 7 Measuring Company Performance 207</p>
<p>Traditional Performance Measures 210</p>
<p>Measures of Value Added 212</p>
<p>Summary 237</p>
<p>Review 238</p>
<p>CHAPTER 8 Corporate Credit Analysis 241</p>
<p>Types of Credit Risk 241</p>
<p>Factors to Consider in Corporate Credit Analysis 252</p>
<p>Summary 263</p>
<p>Review 264</p>
<p>CHAPTER 9 Analysis of Equity Risk Using Fundamentals Factor Models 267</p>
<p>Measuring Risk 267</p>
<p>Asset Pricing Model 271</p>
<p>Factor Models 275</p>
<p>Fundamental Factor Models 276</p>
<p>Summary 280</p>
<p>Review 281</p>
<p>CHAPTER 10 The Lessons We Learn 283</p>
<p>The Lessons 288</p>
<p>The Future of Financial Analysis in the Post–Crisis Era 298</p>
<p>Review 299</p>
<p>Answers to End–of–Chapter Questions 301</p>
<p>Index 305</p>