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1.0. Introduction of Financial Statement Analysis - Coggle Diagram
1.0. Introduction of Financial Statement Analysis
Framework
1. Articulate the purpose and context of the analysis:
Xác định mục đích và góc nhìn
2. Collect input:
Organized FS, financial data tables, Completed questionnaires, if applicable
3. Process data:
adjusted FS, common-size statement, ratios and graphs, forecasts
4. Analyze/interpret the processed data
: Analytical results
5. Develop and communicate conclusions and recommendations:
Analytical report answering questions posed in Phase ; Recommendation
6. Follow-up:
Updated reports and recommendations
Elements of FS:
Statement of Financial Position (Balance sheet)
Report:
Assets: resources owned or controlled by the firm
Liabilities: obligations to lenders and other creditors
Equity: represents the excess of assets over liabilities, attributable to the firm's owners/shareholders
Interrelationships at
specific point
in time: mối quan hệ nội tại giữa các tài khoản tại một thời điểm nhất định
Basic equation: Asset = Liabilities + Equity
Statement of comprehensive income (Income statement/ P&L)
Report the financial performance over a period of time, reflect from:
Revenues: amounts charged for the delivery of goods or services in the ordinary activities
Other income: gains that may or may not arise in the ordinary activities
Expenses: outflow, depletions (sự suy giảm) of assets, and incurrences (sự phát sinh, tăng thêm) of liabilities that decrease equity
Basic equation: Revenue + other income - Expense = Income - Expense = Net income
Statement of Cash flow (CF Statement)
Report cash receipts and payments, classified as
Operating CF: CF from normal business activities
Investing CF: CF from acquisition or disposal of property, plant and equipment; a subsidiary or segment, investments in other firm
Financing CF: CF from issuance (phát hành) or retirement of debt, equity securities and dividends paid
Disclosing the sources and uses of cash helps creditors, investors, and other statement users evaluate the firm's
liquidity, solvency, and financial flexibility
Statement of Change in Equity
Report changes in the owners' investment in the business over an acc period, including:
Subcribed capital
Retained earning
Non-controlling/Minority interests, reserves
Financial statement notes
FS notes must be audited and required by GAAP and SEC
Include disclosures providing further details about the line items in the primary statements
Provide information about acc methods, assumptions and estimated used by the management to develop the data reported in the FSs
Provide additional infor on material items such as business acquisition (mua lại) or disposal (thanh lý), legal proceedings (litigation), commitment and contingencies, significant customers, transaction to related parties, and segments of the firms, subsequent events, financial instruments and related risks.
Management commentary (Management's report/ management discussion and analysis (MD&A))
IRFS provides guidance,
not requirement
, with 5 content
(1): business nature
(2): management's objectives & strategies
(3): the firm's significant resources, risks & relationships
(4): results of operations
(5): critical (đánh giá/phê bình) performance measures
GAAP required but not audited, managament must highlight
any important trends
identify significant events and uncertainties that may affect the firm's liquidity, capital resources
results of operations
off-balance sheet obligations
contractual commitments
Management also discusses prospects for the upcoming year with respect to inflation, future goals, material events, and uncertainties
The section must also discuss critical acc policies that require management to make subjective judgements and have a material impact on the FS
Business and geographic segment (phân khúc) reporting
Nó là các mảng thỏa điều kiện sau
Engages in activities that may generate revenue and create expense, including a start-up segment that has yet to earn revenues
Whose results are regularly reviewed by the company's senior management
for which discrete (rõ ràng) financial infor is available
1 segment need have portion > 10% revenues, assets, or income
Tổng các operating segment phải >= 75% firm's external sales
Audit report
Audit opinion
Unqualified
(tuân thủ chuẩn mực kế toán): FS give a "true and fair view" (international) or are "fairly presented" (international and US) in accordance with applicable acc standards
Qualified
(1-2 tk ko theo chuẩn): Some scope limitation or expection to act standards
Adverse
(100% ko tuân thủ): FS materially depart from standards (not fairly presented)
Disclaimer
(ko đủ bằng chứng là tốt hay xấu): Audit is unable to issue audit opinion
Objective
Obtain
reasonable assurance
(đảm bảo) about whether the FS as a whole are free from material error, whether due to fraud or error; the FS are prepared in all material respects, in accordance with an applicable financial reporting framework
Give opinion about acc standards, estimates, assumptions applied
Give opinion about the internal control system (only required by GAAP)
Report on the FS, and communicate as required by the IFRS, in accordance with the auditor's findings
Internal Control
Is a system designed by the company to ensure that it presents accurate (chính xác) FS
Requirement:
Explicity (rõ ràng) accept responsiblity for the effectiveness of internal control
Evaluate the efectiveness of internal control using suitables control criteria (tiêu chí)
Provide a report on internal control
Role:
Reduces the risk of asset loss
Help ensure that plan infor is complete & accurate, FS are reliable, and the plan's operations are conducted in accordance with the provisions of applicable laws and regulations
=> Assure that the plan is achieving its financial reporting objectives AICPA
Major differances between IFRS and GAAP: trang 5/128 Note và 16/258 Slide
Other sources of infor
Issuer sources:
Earnings calls: công bố kết quả và Q&A với analyst
Presentations and events: giống earning calls nhưng và được là trang trọng và chi tiết hơn, theo định kỳ hơn
Press releases
Company website
Speaking with management, investor realtions, or other company personnel
Public third-party sources:
Free industry whitepapers or analyst reports
General new outlets
economic or industry indicators
Industry-specific news outlets
Social media
Proprietary third-party sources:
Analyst reports and communications
Reports and data from platforms
Reports and data from consultancies
Proprietary primary research:
Surveys, conversations, product comparisons, and other studies commissioned
Standard-setting bodies and Regulatory authorities
Standard-setting bodies
set the standard
Private sector organizations of accountants & auditors that develop financial reporting rules, regulations and acc standard
IASB: develop International reporting & acc standards to attemp to converge acc standards across different nations
=> IFRS
FASB: Develop US financial acc standard => US-GAAP
Regulatory authorities
GOV entities that have the legal autority to enforce the financial reporting requirements set forth by the standard - setting bodies
IOSCO: is an organization of cointries' security regulator (including SEC). Core objective is to ensure that markets are fair, efficient and transparant. Other objectives include to reduce systematic risk and to protect investors. => technically not a regulatory authority
SEC: any company issuing securities in the US or involved in the US capital market, is subject to rules and regulations of SEC