Global Market Analysis Geoff Brown Professor Duhn ACC 680 March 5, 2017 Objectives Introduction Potential issues in financial statement analysis Recommendations on the issues International financial statement analysis potential benefits 2 Introduction: financial statements analysis Definition; the act of looking at financial statements with a view of evaluating the financial status of the company to make better economic decisions(Brown et.al, 2014) Financial statements include balance sheet, income statement, statement of equity and cash flow statement among others Financial analysis uses tools such as financial ratios Financial statement analysis make the use of various tools. The most common tools is financial ratios. This financial ratios are classified into various categories depending on the objective they are required to achieve. The common financial ratios are classified into liquidity, profitability, solvency, operating financial ratios and leverage ratios. 3 Introduction (continued) Statement of the problem- effect of global market on financial statement analysis Scope; financial statement analysis in the us vis a vis the global market global market of choice is German. This presentation is intended to give an outline of the various opportunities as well as threats that will be encountered as result of having global operations. The threats and opportunities will have a bias on the various effects this global markets will have on the process of financial statement analysis. This will also be a comparison between the host country, USA and the new country referred to as the global market. The global market in this case is German 4 Potential issues Legal systems Tax regulation Political and political ties Inflation Funding mechanism This are the major determinants of many countries accounting system and by the extension the process of financial statement analysis. They present both threats and opportunities to the business. The will be each be discussed in the subsequent slides. 5 Legal system There two types of legal systems namely common law and codified roman law The kind of accounting system is determined by the legal system German being the global market uses codified roman law. Accounting profession in German is highly regulated with procedures laid down on particular transaction In the German law is silent about items such as cash flow statements, leases and also transactions involving foreign currency transactions(Geppert et.al, 2016) Unlike in the USA and other countries who use the common law legal system, the accounting field is highly regulated in German. In countries operating under the common law regime the laws are left to professional bodies to deliberate on the various contentious issues. In this case various tools such as cash flow statement are very important when it comes to issues such liquidity. Lack of clear direction on such an item can make benchmarking wit ...

1. Global Market Analysis
Geoff Brown
Professor Duhn
ACC 680
March 5, 2017
Objectives
Introduction
Potential issues in financial statement analysis
Recommendations on the issues
International financial statement analysis potential benefits
2
Introduction: financial statements analysis
Definition; the act of looking at financial statements with a
view of evaluating the financial status of the company to make
better economic decisions(Brown et.al, 2014)
Financial statements include balance sheet, income statement,

2. statement of equity and cash flow statement among others
Financial analysis uses tools such as financial ratios
Financial statement analysis make the use of various tools. The
most common tools is financial ratios. This financial ratios are
classified into various categories depending on the objective
they are required to achieve. The common financial ratios are
classified into liquidity, profitability, solvency, operating
financial ratios and leverage ratios.
3
Introduction (continued)
Statement of the problem- effect of global market on financial
statement analysis
Scope; financial statement analysis in the us vis a vis the
global market
global market of choice is German.
This presentation is intended to give an outline of the various
opportunities as well as threats that will be encountered as
result of having global operations. The threats and opportunities
will have a bias on the various effects this global markets will
have on the process of financial statement analysis. This will
also be a comparison between the host country, USA and the
new country referred to as the global market. The global market
in this case is German
4
Potential issues
Legal systems
Tax regulation

3. Political and political ties
Inflation
Funding mechanism
This are the major determinants of many countries accounting
system and by the extension the process of financial statement
analysis. They present both threats and opportunities to the
business. The will be each be discussed in the subsequent
slides.
5
Legal system
There two types of legal systems namely common law and
codified roman law
The kind of accounting system is determined by the legal
system
German being the global market uses codified roman law.
Accounting profession in German is highly regulated with
procedures laid down on particular transaction
In the German law is silent about items such as cash flow
statements, leases and also transactions involving foreign
currency transactions(Geppert et.al, 2016)
Unlike in the USA and other countries who use the common law
legal system, the accounting field is highly regulated in
German. In countries operating under the common law regime
the laws are left to professional bodies to deliberate on the
various contentious issues. In this case various tools such as
cash flow statement are very important when it comes to issues
such liquidity. Lack of clear direction on such an item can make
benchmarking with local entities difficulty.
6

4. Source of funding
There are two orientations when it comes to funding namely
capital markets and credit based system( Brusca et.al, 2016)
There are various requirements any company that is or intends
to be publicly traded
For instance there is the requirement for forward looking
information that changes the analysis parameters( Brusca et.al,
2016)
German uses a credit based system
Financing is from banks among other lenders
Emphasizes is on profitability
Unlike in the US where the capital markets are well developed,
in Germany the main source of funding would be banks. In
reporting the emphasize will therefore be on profitability as
compared to growth models and ratios.
7
Taxation
In German, financial reports are prepared with a view of or
rather form the grounds for taxation( Brusca et.al, 2016)
There are set rules for depreciation of assets and this can be a
problem when it comes to the computation of some specialized
assets( Brusca et.al, 2016)
In the US financial reporting and taxation are treated as
different activities hence statements used for reporting are
easily used for decisions such investment. There has to be
additional computation done to the statements in the global
market in order to rely on them for financial analysis and
modeling.
8
Political and economic ties

5. Refers to economic blocs, treaties and agreements
German is in the EU.
EU has been working towards the harmonization of practices.
German has various agreements with trading partners. This
agreements will sometimes touch on accounting standards and
taxation among other issues. Familiarizing with this
arrangements is will go a long away in doing an objective
analysis.
9
Inflation
Affects any analysis using historical prices
Can distort profitability ratios
Requires the use of adjustments for objective analysis
Makes country to country comparison difficulty
Taxation requires careful computation to avoid paying taxes on
profits increased by inflation( Zeff, 2016).
The inflation rates will differ from one country to another. The
inflation rates in the US are very different from the ones in
German. Any objective analysis will have to factor in an
inflation factor for analysis and also for comparison between
the two countries. Tax is applied on the profit. The profit figure
might be high due the inflation in the global market.
10
Opportunities
Disclosure requirement are more lenient
Potential for litigation from stakeholders is minimal
The requirement to report in timely and promptly especially in
the case of losses is relaxed

6. In the German regime only one set of statement is required for
reporting and taxation
since the requirement for full disclosure is not strict as
compared to common law countries legal disputes arising from
investors or other stakeholders who have relied on the
information is minimal . The company is required by the law to
produce only one set of statement for taxation unlike in the us
where statements for taxation are different from statements for
financial reporting.
11
Recommendations
Understanding the Generally accepted accounting principles
Understanding the local accounting and reporting requirements.
Clear understanding of accounting standards harmonization.
Autonomy in the preparation and analysis of financial
statements
All the countries have borrowed from the generally accepted
accounting principles, understanding this on top of the
individual countries accounting methods can enable to reconcile
any differences. For analysis purposes, separate set of financial
statements should be prepared to avoid giving wrong analysis.
12
References.
Brown, P., Preiato, J., & Tarca, A. (2014). Measuring country
differences in enforcement of accounting standards: An audit
and enforcement proxy. Journal of Business Finance &
Accounting, 41(1-2), 1-52.
Brusca, I., Caperchione, E., Cohen, S., & Rossi, F. M. (Eds.).
(2016). Public sector accounting and auditing in Europe: The

7. challenge of harmonization. Springer.
Geppert, M., Matten, D., & Williams, K. (Eds.). (2016).
Challenges for European management in a global context:
Experiences from Britain and Germany. Springer.
Zeff, S. A. (2016). Forging accounting principles in five
countries: A history and an analysis of trends. Routledge.
ACC 680 Milestone Three Guidelines and Rubric
You will prepare a draft of the section of your final presentation
that covers the topic of the global market. Specifically, you will
analyze potential issues in financial statement analysis in your
company’s country of choice and make a recommendation on
how to avoid these issues. You will also weigh the benefits of
the international financial statement analysis process.
For this project, consider this scenario: you have worked very
hard and have just earned a promotion at Quality CPA firm. As
part of your new responsibilities, you will be advising an
influential client on their international aspirations. Their
business has been booming and they are seriously considering
expanding their operation overseas. They are concerned about
the political and financial risks of such an undertaking.
You will build a multimedia presentation (with speaker notes to
elaborate) that addresses the upper management of this
company. You will choose a country other than the United
States. This country will be presented as a potential destination
for the company, although other countries can be included, as
the global market is the focus. The presentation must explore
the company’s potential expansion into the chosen country, the
global market in general, and how that will impact their

8. operations.
Specifically, the following critical elements must be addressed:
III. Global Market: For this part of the project, you will
explain to your audience the impact that expanding into the
global market will have on your decision-making tools and
processes.
A. Analyze the potential issues in financial statement analysis
when conducting business in the chosen country.
B. Make recommendations on how your company could avoid
these financial statement analysis issues.
C. Analyze the international financial statement analysis
process for potential benefits. In other words, what would be
the benefits of international financial statement analysis despite
the potential issues?
Guidelines for Submission: Your multimedia presentation
should include 10–15 slides, which must be accompanied by
speaker notes and may contain audio if you wish.
Instructor Feedback: This activity uses an integrated rubric in
Blackboard. Students can view instructor feedback in the Grade
Center. For more information, review these instructions
Critical Elements
Exemplary (100%)
Proficient (90%)
Needs Improvement (70%)
Not Evident (0%)
Value
Global Market:
Potential Issues
Meets “Proficient” criteria and provides keen insight into how
the process of reviewing financial statements may influence the
company in the scenario

9. Analyzes the process of reviewing financial statements for
potentials issues when expanding into the global market
Analyzes the process of reviewing financial statements for
potentials issues when expanding into the global market but
analysis lacks depth or detail
Does not analyze the process of reviewing financial statements
for potentials issues when expanding into the global market
30
Global Market:
Recommendations
Meets “Proficient” criteria and
communicates recommendations in a professional manner that is
also
easy for the client to understand
Makes recommendations for how the company in the scenario
could avoid issues of international financial statement analysis
Makes recommendations for how the company in the scenario
could avoid issues of international financial statement analysis
but recommendations are inappropriate or lack detail
Does not make recommendations for how the company in the
scenario could avoid issues of international financial statement
analysis
30
Global Market:
Potential Benefits
Meets “Proficient” criteria and provides keen insight into the
analysis of the international financial statement review process
for potential benefits
Analyzes the international financial statement review process
for potential benefits
Analyzes the international financial statement review process
for potential benefits but analysis lacks depth or detail

10. Does not analyze the international financial statement review
process for potential benefits
30
Articulation of
Response
Submission is free of errors related to citations, grammar,
spelling, syntax, and organization and is presented in a
professional and easy-to-read format
Submission has no major errors related to citations, grammar,
spelling, syntax, or organization
Submission has major errors related to citations, grammar,
spelling, syntax, or organization that negatively impact
readability and articulation of main ideas
Submission has critical errors related to citations, grammar,
spelling, syntax, or organization that prevent understanding of
ideas
10
Total
100%