财务报表分析1

Time Magazine: Persons of the Year 2002: Whistleblowers
• Cynthia Copper of Worldcom • Colleen Rowley of FBI • Sherron Watkins of Enron
When you think of accountants, what image comes up to your mind?
To get papers mentioned, from a PKU computer, go to or just ask from me.
How important is accounting information?
• January 22, 2003, after market closed, AT&T (stock symbol T) announced:
Financial Accounting and Tax Accounting • Tax accounting is designed by IRS, Internal Revenue Service • Major difference in revenue recognition and expense recognition • Tax accounting can embed government‟s economic policies
•
The Father of Accounting-Luca Pacioli (1445-1517) • He wrote a famous mathematics book • In one chapter he invented double-entry accounting system • He taught Leonardo Da Vinci perspective and proportionality. The knowledge was used to paint “the Last Supper”
• EVA®, Economic value added, Residual income valuation (RIV), Edward, Bell, Ohlson Model (EBO) • In one word, Share value = f (earnings, book value, dividend, cash flow, etc.)
What a “great” time for accounting?
• Or isn‟t it? Accounts: angels or devils? You may hate them, but you have to have them • 2002, the year of accounting • Enron, Worldcom, George W. Bush, Dick Cheney • Blame accounting on anything, from investor losses to Saddam Hussein hiding nuclear weapon • But we stay cool!
5000
0 NYSE AMEX NASDAQ US
The Regulator of U.S. Stock Market
• SEC, the Securities and Exchange Commission • • Arthur Levitt, commissioner, 1993-2000 in the Clinton administration • Numbers Game Speech, 1998
Syllabus
• A financial statement user‟s perspective • Emphasize two issues: Earnings Management and valuation • Frequent mini-case analysis • One big case analysis, individually or in groups • News articles will be tested in final exam • Expect to read A LOT!
Revenue for 4th quarter shrank to $9.3 billion from 10.2 billion in the 4th quarter of previous year Loss from continuing operations widened to $611 million from $216 million.
Goals of this course
• • • • How to read financial statement How to interpret financial statement What inferences to draw from financial statement How to base economic decisions on the information in financial statement • A language to communicate in business community • To make friends
“Big Four” International Accounting Firms • Ernst Young (worldwide revenue 2002: $10.1
billions, 4.3 billions in the U.S.)
• • • •
PriceWaterhouseCoopers Deloitte & Touche KPMG Arthur Anderson (oops!)
•
International Accounting Standards
International Accounting Standards Committee (IASC) Based at London Independent and privately funded Meant to design a set of worldly accepted accounting standards Mr. Shuping Feng from Chinese Accounting Standard Committee serve as an advisory board member International Accounting Standards 41 standards up to date e.g., IAS 2. Inventory, January 1, 1995
The users of accounting and economic consequence of accounting decisions
• • • • • • Equity investors Creditors Government Customer Suppliers Labor union
or Dot.bomb-NASDAQ 1998-2002
5000 4000 3000 2000 1000 0
The Three Major Stock Exchanges
25000
20000
15000
s Market Cap. Billions
Accounting-based Valuation-2
• Ultimately, we do valuation to earn higher returns on stock trading. • We get an intrinsic value number, compare it to prevailing stock price, if our value estimate is higher than price, we buy; otherwise we sell. • Frankel and Lee, Journal of Finance, 1999
Earnings Management: Rao, Teoh, Wong, Review of Accounting Studies, 1998
Earnings restatements – Min Wu, HKUST
Accounting-based Valuation
• Who are my peers? Earnings multiples, book-value multiples, sales multiples
Dow Jones Industrial Average 1930-2002
DJIA, NASDAQ 1990-2002
14000 12000 10000 8000 6000 4000 2000 0
Back to Square One: DJIA 1998-2002
12000 11500 11000 10500 10000 9500 9000 8500 8000 7500
IMBA Financial Accounting
• Instructor: Guohua Jiang (姜国华）
University of California, Berkeley (加州大学 伯克利分校)
田长霖，陈省身，李远哲，赵元任，张爱玲, 钱颖一 。。。 Most recent Nobel Prize winners: Daniel McFadden (2000), George Ackerlof (2001)
Investing Motto
Two friends went hunting in the jungle. All of a sudden, a bear jumped out of nowhere and came after them. A: Run! B: No, it is hopeless, we won‟t overrun a bear. A: But I do not have to run faster than the bear. I only need to run faster than you!
Auditor Opinions
• Unqualified
“Unqualified” opinion is actually good opinion, confused? I was.
• Qualified • Disclaimer of opinion • Adverse opinion
General Electric 2001 Annual Report (10K)
The current SEC commissioners
Who issue American Accounting Standards
• FASB: Financial Accounting Standards Board Set up in 1973 to replace Accounting Principle Board (APB) An independent, private organization Standards issued recognized by SEC GAAP: Generally Accepted Accounting Standards 7 concept statements (principles) e.g., No. 7 (February 2000) Using cash flow information and present value in accounting measurements 148 statements of standards (rules) e.g., No. 1 (December 1973) Disclosure of foreign currency translation information