Financial Statement Analysis Chapter 1 Company information Bonsón, E., Cortijo, V., Flores, F.    Content on this file is ...
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Introduction <ul><li>Periodically, companies  report  on their financial situation, results and business plans. </li></ul>...
Introduction <ul><li>The understanding and analysis of these documents is essential for a large number of  interest groups...
 
<ul><li>Thus, it is possible to classify the company information in accordance with three criteria or  dimensions : whethe...
 
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Public utility of company information <ul><li>In each case, company information should allow a sufficiently  realistic ass...
Public utility of company information <ul><li>The information needed to be able to evaluate the situation and the performa...
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Information users and their interests <ul><li>The activity of the corporation always has a certain  impact :  financing  i...
 
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Regulated company information and sources <ul><li>A key framework of regulated financial information is the  IFRS  environ...
 
Company documentation search engine  at the French Stock Commission  (AMF, Autorité des Marchés Financiers).
ICAEW lists of public repositories, by country
<ul><li>Thus, the accounts of a particular company group can be obtained on the corporate  Website , normally in English, ...
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Trends in company information: EBR, GRI and CSR <ul><li>There exists a set of  voluntary  information, accounting and othe...
Trends in company information: EBR, GRI and CSR <ul><li>To the extent that the interest of third parties has been growing,...
CSR
EBR  framework PROMOTED BY THE  AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, AICPA (USA)
GRI  framework PROMOTED BY THE GLOBAL REPORTING INITIATIVE  CONSORTIUM (THE NETHERLANDS)
AECA  framework PROMOTED BY THE SPANISH ACCOUNTING AND BUSINESS ADMINISTRATION ASSOCIATION: AECA (SPAIN)
Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and...
Company information generated  in the business environment <ul><li>The information necessary for analyzing the economic an...
Company information generated  in the business environment <ul><li>This information can be grouped into  four categories :...
 
Markets
European  Central Bank  statistics
Other analysts – rating
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FSA Chapter 1

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FSA Chapter 1

  1. 1. Financial Statement Analysis Chapter 1 Company information Bonsón, E., Cortijo, V., Flores, F.   Content on this file is licensed under a Creative Commons Attribution Non-Commercial No Derivatives Works 3.0
  2. 2. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  3. 3. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  4. 4. Introduction <ul><li>Periodically, companies report on their financial situation, results and business plans. </li></ul><ul><li>This reporting may be undertaken in compliance with an applicable regulation , or on the company's own initiative . </li></ul><ul><li>There is always an obligatory core of standard information, constituted by the &quot;accounts&quot; or financial statements . </li></ul>
  5. 5. Introduction <ul><li>The understanding and analysis of these documents is essential for a large number of interest groups : employees, customers, suppliers, financial entities, public authorities ...- that need to take informed decisions </li></ul><ul><li>It is the cycle of business activity itself, in its diverse phases (leadership, organisation and planning of the business, financing, investment and operations), that generates the information that the company later makes available to the public. </li></ul>
  6. 7. <ul><li>Thus, it is possible to classify the company information in accordance with three criteria or dimensions : whether or not its preparation and disclosure is regulated ; whether or not it is information of accounting nature; and whether the company itself or else some other external agent that is responsible for its production </li></ul>
  7. 9. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  8. 10. Public utility of company information <ul><li>In each case, company information should allow a sufficiently realistic assessment to be made of the entity, such that a potential investor may be advised for or against the appropriateness of taking a position (as a shareholder) in the company, and similarly such that a potential lender knows the risk incurred in lending money to the company. </li></ul><ul><li>Corporate reality has increased in complexity over time, and will probably increase even more: in consequence, the variety and amount of information needed to support informed decision-making is continually increasing. </li></ul>
  9. 11. Public utility of company information <ul><li>The information needed to be able to evaluate the situation and the performance of a company takes different forms and can be obtained from diverse sources . </li></ul><ul><li>Sometimes it is data reported officially to various authorities, and we can be reasonably sure of its integrity and veracity . </li></ul><ul><li>Other times it is dispersed information, text, numerical statistical series, diagrams, specialist reports, of heterogeneous character, so its reliability and significance will vary and must be evaluated . </li></ul>
  10. 12. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  11. 13. Information users and their interests <ul><li>The activity of the corporation always has a certain impact : financing is obtained from banks and shareholders; products and services are sold to the customers; salaries, fees, taxes, rents, etc. are paid; investments are made. </li></ul><ul><li>In addition the company may generate wastes that adversely impact the environment ; it also produces images, messages, personalities, fashions, and can influence culture and social customs in myriad ways. </li></ul><ul><li>The diversity of users potentially interested in the company's business activity explains how and why the regulation of information disclosure has evolved, as well as the voluntary disclosure practices that are emerging. </li></ul>
  12. 15. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  13. 16. Regulated company information and sources <ul><li>A key framework of regulated financial information is the IFRS environment. </li></ul><ul><li>The strategy of the EU is based on adaptation to the IFRS in accordance with Regulation (EC) No. 1606/2002. At the consolidated level , the regulations are applied directly. At the individual level, it has been left to the discretion of each State member. </li></ul><ul><li>The Directives 2004/109/EC and 2007/14/EC regulate the way in which quoted companies prepare and publish their regulated information, under the supervision of the financial services authority, company register, company office and/or stock exchange commission. </li></ul>
  14. 18. Company documentation search engine at the French Stock Commission (AMF, Autorité des Marchés Financiers).
  15. 19. ICAEW lists of public repositories, by country
  16. 20. <ul><li>Thus, the accounts of a particular company group can be obtained on the corporate Website , normally in English, forming part of the annual report, signposted by the Investor Relations link. </li></ul><ul><li>In addition, it is possible to access, at no charge, after first registering, or by previous payment of a fee, a copy of the accounts available on the Web pages of the regulators mentioned or else via various on-line commercial services that compile the published accounts of companies. </li></ul>Regulated company information and sources
  17. 21. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  18. 22. Trends in company information: EBR, GRI and CSR <ul><li>There exists a set of voluntary information, accounting and other kinds, provided by the company , which does not, therefore, follow any legal standards in its production. </li></ul><ul><li>The existence of this additional information is due to individual peculiarities of the company or of its industry sector, or to its willingness to comply with particular quality standards . </li></ul>
  19. 23. Trends in company information: EBR, GRI and CSR <ul><li>To the extent that the interest of third parties has been growing, a double movement has taken place: there is more and more information disclosed voluntarily , and the regulations are continually being extended . </li></ul><ul><li>In this part, we consider more deeply the information of voluntary character, and we analyze a series of models that attempt to structure its content. In this way it will be easier to compare the voluntary information provided by different companies, and therefore, increase its utility. </li></ul>
  20. 24. CSR
  21. 25. EBR framework PROMOTED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, AICPA (USA)
  22. 26. GRI framework PROMOTED BY THE GLOBAL REPORTING INITIATIVE CONSORTIUM (THE NETHERLANDS)
  23. 27. AECA framework PROMOTED BY THE SPANISH ACCOUNTING AND BUSINESS ADMINISTRATION ASSOCIATION: AECA (SPAIN)
  24. 28. Index <ul><li>Introduction </li></ul><ul><li>Public utility of company information </li></ul><ul><li>Information users and their business interests </li></ul><ul><li>Regulated company information and sources </li></ul><ul><li>Trends in company information: EBR, GRI and CSR </li></ul><ul><li>Company information generated in the business environment </li></ul>
  25. 29. Company information generated in the business environment <ul><li>The information necessary for analyzing the economic and financial situation of a company goes well beyond the information issued by the company itself. </li></ul><ul><li>The analyst can take advantage of information on the entity of interest produced by various agents external to the entity </li></ul>
  26. 30. Company information generated in the business environment <ul><li>This information can be grouped into four categories : </li></ul><ul><li>  </li></ul><ul><li>Stock market information: prices of shares and securities, derivatives, as well as volumes of transaction. </li></ul><ul><li>Business reports and risk assessments or ratings . </li></ul><ul><li>Industry information: data from other firms, either individually or aggregates, also synthesized using ratios. </li></ul><ul><li>General economic information: interest rates, national production, employment levels and inflation forecasts, and so on. </li></ul>
  27. 32. Markets
  28. 33. European Central Bank statistics
  29. 34. Other analysts – rating

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