FSA Chapter 3

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  • 1. Financial Statement Analysis Chapter 3 Financial Statements 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. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 3. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 4. Introduction
    • IAS 1 , Presentation of Financial Statements, describes overall requirements for the presentation of general-purpose financial statements, as well as guidelines for their structure and minimum requirements for their content.
  • 5. Introduction
    • IAS 1 defines guidelines for the structure of financial statements and minimum requirements for their presentation and content but it does not prescribe the order or format
    • Based on the information provided by this standard and the rest of IFRS, the IASC Foundation XBRL Team has been developing, since 2002, IFRS Taxonomies –that is, digital templates - in order to facilitate the adoption of IFRS
  • 6. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 7. Statement of financial position
    • formerly known as balance sheet , it provides information about the economic resources owned by a company (assets) as well as the financial resources used to acquire them (liabilities and equity) at a moment in time
  • 8. Statement of financial position
    • Under IAS 1, companies are required to classify its assets and liabilities into two different categories: current and non current
    • Alternatively , IAS 1 allows companies to show its assets and liabilities on a liquidity basis when this presentation format provides more reliable or relevant information.
  • 9.  
  • 10.  
  • 11.  
  • 12.  
  • 13. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 14. Statement of comprehensive income
    • It appeared as a consequence of the last revision of the IAS 1
    • It provides the analyst with information about the performance of a company
    • It is really useful to assess potential changes in the economic resources owned by the entity, predict future cash flows , and make other informed predictions
  • 15. Statement of comprehensive income
    • It includes, not only all the components of “ profit or loss ” but also all the components of “ other comprehensive income ” that are:
      • Changes in revaluation surplus
      • Actuarial gains and losses on defined benefit plans
      • Translations gains and losses
      • Gains and losses on re-measuring available-for-sale financial assets
      • Effective portion of gains and losses on hedging instruments in a cash flow edge
  • 16. Statement of comprehensive income
    • Components of comprehensive income can be presented either in a single statement or in two statements
    • If a company chooses the second option, it must prepare a separate income statement , which includes all components of profit or loss and distinguishes between profit (loss) from continuing and discontinued operations
    • The company can classify expenses according to their nature of their function
  • 17.  
  • 18.  
  • 19. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 20. Statement of changes in equity
    • It must include the following information on the face of the statement:
      • total comprehensive income for the period (disclosing in different sections amounts attributable to owners and to minority interest).
      • for each component of equity, the effects of retrospective application or retrospective restatement recognized in accordance to IAS 8 , Accounting Policies, Changes in Accounting Estimates and Errors.
      • transactions with owners , providing information about contributions from and distributions to owners.
      • for each component of equity, the reconciliation between the carrying amounts at the beginning and at the end of the period, separately disclosing each change.
  • 21. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 22. Statement of cash flows
    • Fully explained in IAS 7 , it provides information about the cash receipts and cash payments of an entity during a period classified by
      • operating (can be presented under the direct or the indirect method. Although the direct method has been strongly endorsed by the IASB, very few reporting companies decided to use it)
      • investing and
      • financing activities
    • It can be used to estimate the amount, timing and certainty of future cash flows
  • 23.  
  • 24. to be continued
  • 25. continued
  • 26. to be continued
  • 27. to be continued
  • 28. continued
  • 29. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 30. Notes to the financial statements
    • The objectives of the notes to the financial statements are
    • to complement , clarify and qualify the information included in general-purpose financial statements
    • to provide information about the basis of preparation of the financial statements and the specific accounting policies adopted
    • to report information required by IAS which is not presented elsewhere and additional information
    • They must be presented in a systemic manner, so each item on the face of the financial statements must be cross-referenced
  • 31.  
  • 32.  
  • 33. Index
    • Introduction
    • Statement of financial position
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to the financial statements
    • Chromosome of valuation and presentation for each company
  • 34. Chromosome of valuation and presentation for each company
    • Alternative options allowed by IFRS
    • Presentation of financial statements
      • Alternative options for:
        • Statement of financial position
        • Income statement
        • Cash flow statement
    • Valuation of assets
      • Alternative options for:
        • Property plant and equipment
        • Investment property
        • Intangibles other than goodwill
  • 35. Company chromosome, first view
  • 36. Chromosome usefulness in future chapters To define calculable analysis indicators To define comparable analysis indicators