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Fridson M., Alvarez F.. Financial Statement Analysis. John Wiley & Sons, Inc.,2002. — 413 p. 2002

This third edition of Financial Statement Analysis, like its predecessors, seeks to equip its readers for practical challenges of contemporary busi­ness. Once again, the intention is to acquaint readers who have already ac­quired basic accounting skills with the complications that arise in applying textbook-derived knowledge to the real world of extending credit and in­vesting in securities. Just as a swiftly changing environment necessitated ex­tensive revisions and additions in the second edition, new concerns and challenges for users of financial statements have accompanied the dawn of the twenty-first century.

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In memory of my father, Harry Yale Fridson, who introduced me to accounting, economics, and logic, as well as the fourth discipline essential to the creation of this book—hard work!
Preface to third edition
Acknowledgments
Contents
Reading between the Line
1 The Adversarial Nature of Financial Reporting
Financial statement analysis is an essential skill in a variety of occupations including investment management, corporate finance, commercial lend­ing, and the extension of credit. For individuals engaged in such activities, or who analyze financial data in connection with their personal investment decisions, there are two distinct approaches to the task.
THE PURPOSE OF FINANCIAL REPORTING
THE FLAWS IN THE REASONING
SMALL PROFITS AND BIG BATHS
MAXIMIZING GROWTH EXPECTATIONS
DOWNPLAYING CONTINGENCIES
THE IMPORTANCE OF BEING SKEPTICAL
CONCLUSION
The Basic Financial Statement
   2 The Balance Sheet
The balance sheet is a remarkable invention, yet it has two fundamental shortcomings.
THE VALUE PROBLEM
ISSUES OF COMPARABILITY
"INSTANTANEOUS" WIPEOUT OF VALUE
HOW GOOD IS GOODWILL?
LOSING VALUE THE OLD-FASHIONED WAY
TRUE EQUITY IS ELUSIVE
PROS AND CONS OF A MARKET-BASED EQUITY FIGURE
UNDISCLOSED HAZARDS
THE COMMON FORM BALANCE SHEET
CONCLUSION
3 The Income Statement
The goal of analyzing an income statement is essentially to determine whether the story it tells is good, bad, or indifferent.
MAKING THE NUMBERS TALK
HOW REAL ARE THE NUMBERS?
CONCLUSION
4 The Statement of Cash Flows
The present version of the statement that traces the flow of funds in and out of the firm, the statement of cash flows, became mandatory, under SFAS 95, for issuers with fiscal years ending after July 15, 1988.
THE CASH FLOW STATEMENT AND THE LBO
ANALYTICAL APPLICATIONS
CASH FLOW AND THE COMPANY LIFE CYCLE
THE CONCEPT OF FINANCIAL FLEXIBILITY
IN DEFENSE OF SLACK
CONCLUSiONS
A Closer Look at Profit
What Is Profit?
Profits hold an exalted place in the business world and in economic the­ory.
BONA FIDE PROFITS VERSUS ACCOUNTING PROFITS
WHAT IS REVENUE?
WHICH COSTS COUNT?
HOW FAR CAN THE CONCEPT BE STRETCHED?
CONCLUSION
Revenue Recognition
Experience teaches that it can be dangerous to accept reported revenues at face value, even if they have been audited.
INFORMIX'S TROUBLES BEGIN
CALLING THE SIGNALS
ASTRAY ON LAYAWAY
RECOGNIZING MEMBERSHIP FEES
A POTPOURRI OF LIBERAL REVENUE RECOGNITION TECHNIQUES
CONCLUSION
7 Expense Recognition
As Chapter 6 illustrated, companies can grossly distort their earnings through aggressive revenue recognition.
AOL'S SEARCH FOR WIGGLE ROOM
IBM'S INNOVATIVE EXPENSE REDUCTION
SIMPLE ANALYSIS FOILS ELABORATE DECEPTION
OXFORD'S PLANS GO ASTRAY
CONCLUSiON
8 The Applications and Limitations of EBITDA
As noted in Chapter 3, corporations have attempted in recent years to break free from the focus on aftertax earnings that has traditionally dominated their valuation.
EBIT, EBITDA, AND TOTAL ENTERPRISE VALUE
THE ROLE OF EBITDA IN CREDIT ANALYSIS
ABUSING EBITDA
A MORE COMPREHENSIVE CASH FLOW MEASURE
WORKING capital adds punch to CASH FLOW ANALYSIS
CONCLUSION
9 The Reliability of Disclosure and Audits
Anaive observer might consider it overkill to scrutinize a company’s finan­cial statements for signs that management is presenting anything less than a candid picture.
AN ARTFUL DEAL
DEATH DUTIES
CHAINSAW AL
STUMBLING DOWN THE AUDIT TRAIL
CONCLUSION
Mergers-and- Acquisitions Accounting
Choosing a method of accounting for a merger or acquisition does not af­fect the combined companies’ subsequent competitive strength or ability to generate cash.
THE TWILIGHT OF POOLING-OF-INTERESTS ACCOUNTING
MAXIMIZING POSTACQUISITION REPORTED EARNINGS
MANAGING ACQUISITION DATES AND AVOIDING RESTATEMENTS
CONCLUSION
11 Profits in Pensions
In 1999, International Business Machines (IBM) reported operating in­come of $11,927 billion. Of that amount, $799 million, or 6.7%, had nothing directly to do with the sale of computers.
AN ADMONITION FROM THE SEC
CONCLUSION
Forecasts and Security Analysi
12 Forecasting Financial Statements
Analysis of a company’s current financial statements, as described in the Chapters 2 through 4, is enlightening, but not as enlightening as the analysis of its future financial statements.
A TYPICAL ONE-YEAR PROJECTION
SENSITIVITY ANALYSIS WITH PROJECTED FINANCIAL STATEMENTS
HOW ACCURATE ARE PROJECTIONS IN PRACTICE?
PROJECTING FINANCIAL FLEXIBILITY
PRO FORMA FINANCIAL STATEMENTS
Multiyear projections
CONCLUSiON
Credit Analysis
Credit analysis is one of the most common uses of financial statements, re­flecting the many forms of debt that are essential to the operation of a modern economy.
BALANCE sheet ratios
INCOME STATEMENT RATIOS
STATEMENT OF CASH FLOWS RATIOS
COMBINATION RATIOS
RELATING RATIOS TO CREDIT RISK
14 Equity Analysis
Countless books have been written on the subject of “picking stocks.”
THE DIVIDEND DISCOUNT MODEL
THE PRiCE-EARNiNGS RATIO
WHY P/E MULTIPLES VARY
THE DU PONT FORMULA
VALUATION THROUGH RESTRUCTURING POTENTIAL
CONCLUSION
Bibliography
Glossary
Notes
inde
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  1. Alsharari Nizar Mohammad (ed.). Banking and Accounting Issues. ITexLi,2022. — 175 p. - 2022 ãîä
  2. Hare C., Neo D. (eds.). Trade Finance: Technology, Innovation and Documentary Credit. Oxford University Press,2021. — 417 p. - 2021 ãîä
  3. Fligstein Neil. The Banks Did It: An Anatomy of the Financial Crisis. Harvard University Press,2021. — 334 p. - 2021 ãîä
  4. Cline W.. The Right Balance for Banks. Peterson Institute for International Economics,2017. — 281 p. - 2017 ãîä
  5. Banking, Finance, and Accounting: Concepts, Methodologies, Tools, and Applications. IGI Global,2014. — 1593 p. - 2014 ãîä
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