国际会计学第六版chapter 9

Choi/Meek,6/e1InternationalAccounting,6/eFrederickD.S.ChoiGaryK.MeekChapter9:InternationalFinancialStatementAnalysisChoi/Meek,6/e2LearningObjectivesWhatisalogicalapproachtoanalyzingforeignfinancialstatements?Whyisitdifficulttoundertakeaninternationalbusinessstrategyanalysis?Whataresomestepstoexaminingforeignaccountingpractices?Howdocross-countryvariationsinaccountingmeasurements,disclosurepractices,andauditingstandardsimpactone’sanalysisofforeignfinancialstatements?Choi/Meek,6/e3Howcanyoucopewithdifferencesinnationalaccountingmeasurementpractices?Whatdoesinternationalprospectiveanalysisentailandwhyisitdifficulttoperforminaninternationalsetting?Whataresomepitfallstoavoidwhenconductingcross-countryratioanalysis?Choi/Meek,6/e4WhatisaLogicalApproachtoAnalyzingForeignFinancialStatements?Undertakeabusinessstrategyanalysis.Conductananalysisofafirm’sfinancialreportingpractices.Conductafinancialanalysisusingratioandcashflowdata.Doaprospectiveanalysis.Choi/Meek,6/e5InternationalBusinessStrategyAnalysisStrategyanalysis=gettingtoknowacompanyanditscompetitioninrelationtoitseconomicenvironment.InformationgatheringincludesrecoursetoAnnualreportsCompanystaff,financialanalysts,andotherfinancialprofessionalsChoi/Meek,6/e6WorldWideWebTradegroupsCompetitorsReportersLobbyistsRegulatorsFinancialpressChoi/Meek,6/e7InternationalBusinessStrategyAnalysis(contin)DifficultiesinundertakinganIBbusinessstrategyanalysisProfitdriversandbusinessrisksmaybecountryspecific.Nationalbusinessandlegalenvironmentsdiffer.EnvironmentalriskssuchaschangingprocessandFXriskneedtobeevaluated.Informationsourcesmaybelimitedorunreliable.Choi/Meek,6/e8StepsinExaminingForeignAccountingPracticesIdentifykeyaccountingpolicies.Assessafirm’saccountingflexibility.Evaluatethefirm’saccountingstrategy.Evaluatethequalityofitsfinancialdisclosures.Identifyreportingoutliers.Adjustforaccountingmeasurementsthatdistorttheunderlyingeconomicsofafirm’stransactions.Choi/Meek,6/e9HowDoesDiversityinInternationalAccountingImpactFinancialStatementAnalysis?Measurementdifferenceswithinandbetweencountriesmakeperformancecomparisonsdifficult.MeasurementdifferencesmayrelatetomeasurementoptionspermittedbyGAAP.Choi/Meek,6/e10Measurementdifferencesmaybeduetodifferencesinmanagementdiscretion.Measurementdifferencemaybeduetodifferencesinfinancialstatementorientation;i.e.,creditorvs.shareholder.Measurementdifferencesmayrelatetotheobjectivesoffinancialstatements;i.e.,orientedtowardmoremacrodecisionsvs.microdecisions.Choi/Meek,6/e11HowDoesDiversityinInternationalAccountingImpactFinancialStatementAnalysis?Differencesincorporatetransparencymakeitdifficult:tocomprehendwhatmeasurementrulesarebeingfollowedtoestimatefutureperformancemetricstovalueforecastednumbersbecauseoflargevariancesofthesesubjectiveprobabilitydistributionsChoi/Meek,6/e12Auditingdifferencesaffectthecredibilityofreportednumbersowingtodifferencesin:theinformationcontentoftheauditorsreportthesourceofauditingstandardstheenforcementofauditingstandardsauditorliabilitytothirdpartiesauditorqualificationsauditorcertificationproceduresauditorindependenceChoi/Meek,6/e13CopingMechanismsFormeasurementdifferences:Adoptamutualfund(passive)approachtoinvesting.RestateforeignGAAPtodomesticGAAP.RestateforeignGAAPtoIFRS.Choi/Meek,6/e14Relyonnon-accountingdatausingadividenddiscountmodelorcashflowdata.Immerseyourselfinthelanguage,currencyandGAAPofthecountryyouareinvestingin;i.e.,developamultiple-principlescapability.Choi/Meek,6/e15Undertakecompanyvisitations.Attendcompanyroadshows.Alterinvestmentclassificationsfromspeculativegrade(poordisclosure)toinvestmentgrade(gooddisclosure).Alterinvestmentstrategiesfromactiveinvesting(gooddisclosure)topassiveornon-investing(poordisclosure).FordisclosuredifferencesChoi/Meek,6/e16ForauditdifferencesResearchtheauditingenvironmentinthecountrybeinganalyzed.Institutionalinvestorsaskforasecondauditopinionorengagearecognizedauditfirmwhenconfidenceintheintegrityoftheattestfunctionisindoubt.Assessahigherriskpremiumforauditrisk.Choi/Meek,6/e17ProspectiveAnalysisforecastingafirm’sprospectsbasedonanassessmentofafirm’sbusinessstrategy,accountingpolicy,anditsfinancialanalysis,andarrivingatanestimateofthefirm’svalue.Choi/Meek,6/e18ComplicatingfactorsFluctuatingexchangeratesmakeitdifficulttoforecastafirm’sfuturecostsandrevenueswhensales/purchasesareinvoicedinforeigncurrencies.Nationalvariationsinmeasurement,disclosure,andauditingpracticesincludingnationalenforcementregimesaddtothedifficultyofachievingforecastaccuracy.Choi/Meek,6/e19Nationalvariationsinpricingriskmakeitdifficulttoselectanappropriatediscountrateforvaluationpurposes.ValuationmultiplessuchasP/Eratiosalsovaryfromcountrytocountrycomplicatingappropriatecorporatevaluations.Choi/Meek,6/e20PitfallsinConductingInternationalRatioAnalysisAllofthedifficultiesmentionedpreviouslyinconductingbusinessstrategy,accounting,andfinancialanalysis.Alackofunderstandingofthepolitical,legalandbusinessenvironmentthataffectsthean