Financial Reporting, Financial Statement Analysis and Valuation 7e
ISBN-13: 9780324789416 / ISBN-10: 0324789416
Wahlen/Baginski/Bradshaw is a balanced, flexible, and complete Financial Statement Analysis book that is written with the premise that students learn financial statement analysis most effectively by performing the analysis on actual companies. Students learn to integrate the concepts from economics, finance, business strategy, accounting, and other business disciplines through the integration of a unique six-step process.
- Six-Step Analysis Process - The book is structured using a comprehensive and logical six-step fundamental analysis process to evaluate financial statements and value firms. The six steps include economic analysis of the industry, strategic analysis of the firm, accounting quality analysis, profitability and risk ratio analysis, forecasting, and valuation. This framework provides a sensible and intuitive approach for instructors and students.
- Balanced approach - The text continues to offer a balanced and thorough treatment of the three main elements of financial statement analysis: analysis of firms'' strategies (profitability and risk analysis with ratios), accounting quality analysis, and forecasting and valuation.
- Financial Statement Analysis Package (FSAP) – Faculty and students who use the text are also entitled to use FSAP, which is an extensive, Excel-based analysis package. FSAP enables faculty and students a powerful template package for ratios analysis, financial statement forecasting, valuation, and sensitivity analysis. Instructors find FSAP a great tool to prepare cases and analyze companies. Students find FSAP to be a great tool to analyze and value companies using the methods of the text.
- Actual Companies Used Throughout: Numerous examples in the text--approximately 10 per chapter--are based on the financial information of actual public companies. Each chapter uses PepsiCo''s 2008 financial statements as a continuing case to illustrate the techniques of the chapter. The end of chapter materials for each chapter also contain an integrative case involving Starbucks, so instructors can assign a continuing, integrative case for students to apply their learning. Other real company examples throughout the text include companies students will recognize such as Wal-Mart, Coca-Cola, Enron, Sun Microsystems, Amazon, Nokia, Microsoft, and General Electric.
- Accounting Quality: The text provides stronger-than-ever emphasis on accounting analysis, quality of earnings and persistence, and the quality of financial position. The text emphasizes the role of accounting standards as a solid basis for relevant and reliable information for purposes of analysis and valuation. It introduces students to accounting for all of the major issues associated with financing activities (Chapter 6), investing activities (Chapter 7), operating activities (Chapter 8), and in-depth accounting quality analysis and restatement techniques (Chapter 9).
- Current IFRS & Codification coverage – The text includes both references to GAAP and IFRS, as well as to the new Codification format, so students will have the most relevant information they need.
- Fair Value: The text provides deeper coverage of fair value measurement for assets and liabilities.
- Asset Impairments: The text provides greater emphasis and depth of discussion on asset impairment test (and how they differ between U.S. GAAP and IFRS).
- Business Combinations: The text provides deeper coverage of business combinations and the consolidation process.
- Current Research: The text highlights key findings from recent academic research in each chapter. The text uses relevant research results to broaden students'' understanding and appreciation for the relevance and usefulness of the techniques.
- ThomsonONE. For supplementary financial research beyond the problems and cases in the book, online access to ThomsonONE-Business School Edition, an educational version of the same financial data provided by Thomson Inc. that experts use on a daily basis, is provided for 500 companies. Access card is included with every new copy of the textbook.
1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation.
2: Asset and Liability Valuation and Income Recognition
3. Income Flows versus Cash Flows: Understanding the Statement of Cash Flows
4: Profitability Analysis.
5: Risk Analysis.
6. Financing Activities.
7: Investing Activities.
8: Operating Activities.
9: Accounting Quality.
10: Forecasting Financial Statements.
11: Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach.
12: Valuation: Cash-Flow-Based Approaches.
13: Valuation: Earnings-Based Approaches.
14: Valuation: Market-Based Approaches.
Appendix A: Financial Statements and Notes for PepsiCo, Inc. and Subsidiaries
Appendix B: Management's Discussion and Analysis for PepsiCo, Inc. and Subsidiaries
Appendix C: Financial Statement Analysis Package (FSAP).
Appendix D: Financial Statement Ratios: Descriptive Statistics by Industry and by Year.
- New Author Team - In addition to James M. Wahlen, the book now benefits from the work of two new coauthors: Stephen P. Baginski of the Terry College of Business at the University of Georgia and Mark T. Bradshaw of the Carroll School of Management at Boston College. These coauthors, with their strong research and teaching backgrounds, have combined to produce a new edition with a strong focus on fundamental analysis, a broad and deep coverage of accounting issues including IFRS, and the analysis of companies within a global economic environment. With Mark Bradshaw''s expertise in research and teaching associated with financial analysts, he adds depth and many new ideas to the book''s coverage of financial statement analysis (especially profitability and risk analysis). With Steve Baginski''s expertise in financial accounting and reporting, he adds depth and breadth to the book''s coverage of financial reporting, including coverage of IFRS.
- New Appendix, "Financial Ratios: Descriptive Statistics by Industry," - This appendix consists of data on financial ratios, with descriptive statistics across roughly 40 different industries. This data is very helpful for instructors and students who wish to better understand how to analyze companies within different industries.
- Coverage of Accounting Quality - The accounting quality analysis chapters have been completely reorganized for broader and deeper coverage of accounting issues. The accounting quality chapters are now organized to introduce students to accounting for all of the major issues associated with financing activities (Chapter 6), investing activities (Chapter 7), and operating activities (Chapter 8). A final accounting quality chapter (Chapter 9) presents additional analysis of accounting quality and related financial statement adjustments. The text provides stronger-than-ever emphasis on accounting analysis, quality of earnings and persistence, and the quality of financial position. The text emphasizes the role of accounting standards as a solid basis for relevant and reliable information for purposes of analysis and valuation.
- Emphasis on International Financial Reporting Standards (IFRS) - Both U.S. GAAP and IFRS are covered throughout the text. This edition also emphasizes and demonstrates how choices of alternative GAAP or IFRS rules affect how firms report transactions and financial statements.
- FASB Codification – The text now includes references to GAAP statements in both the traditional format as well as the new Codification format, so instructors can utilize both types of authoritative sources.
- Increased International Firm Examples – The text continues to rely heavily on real-world companies and financial statements for examples and end-of-chapter problems and cases. The text now includes even more examples and problems based on non-U.S. companies, for a greater international application of the material and closer links to IFRS-based financial statements.
James M. Wahlen
James M. Wahlen is the James R. Hodge Chair, Professor of Accounting, and the former Chairman of the MBA Program at the Kelley School of Business at Indiana University. He received his Ph.D. from the University of Michigan and has served on the faculties of the University of North Carolina at Chapel Hill, INSEAD, the University of Washington, and Pacific Lutheran University. Professor Wahlen's teaching and research interests focus on financial accounting, financial statement analysis, and the capital markets. His research investigates earnings quality and earnings management, earnings volatility as an indicator of risk, fair value accounting for financial instruments, accounting for loss reserve estimates by banks and insurers, stock market efficiency with respect to accounting information, and testing the extent to which future stock returns can be predicted with earnings and other financial statement information. His research has been published in a wide array of academic and practitioner journals in accounting and finance. He has had public accounting experience in both Milwaukee and Seattle and is a member of the American Accounting Association. He has received numerous teaching awards during his career. Professor Wahlen is also a coauthor of FINANCIAL REPORTING, FINANCIAL STATEMENT ANALYSIS, AND VALUATION: A STRATEGIC PERSPECTIVE. In his free time, he loves outdoor sports (biking, hiking, skiing, golf), cooking (and, of course, eating), and listening to rock music (especially if it is loud and live).
Stephen P. Baginski
Stephen P. Baginski is the Herbert E. Miller Chair in Financial Accounting at the University of Georgia's J.M. Tull School of Accounting. He received his Ph.D. from the University of Illinois in 1986, and he has taught a variety of financial and managerial undergraduate, MBA, and executive education courses at Indiana University, Illinois State University, the University of Illinois, Northeastern University, Florida State University, Washington University in St. Louis, the University of St. Galen, the Swiss Banking Institute at the University of Zurich, and INSEAD. Professor Baginski has published articles in a variety of journals including The Accounting Review, Journal of Accounting Research, Contemporary Accounting Research, The Journal of Risk and Insurance, Quarterly Review of Finance and Economics, and Review of Quantitative Finance and Accounting. His research primarily deals with the causes and consequences of voluntary management disclosures of earnings forecasts, and he also investigates the usefulness of financial accounting information in security pricing and risk assessment. Professor Baginski has served on several editorial boards and as an associate editor at Accounting Horizons and The Review of Quantitative Finance and Accounting. He has won numerous undergraduate and graduate teaching awards at the department, college, and university level during his career, including receipt of the Doctoral Student Inspiration Award from students at Indiana University. Professor Baginski loves to watch college football, play golf, and run (very slowly) in his spare time.
Mark T. Bradshaw is an Associate Professor of Accounting at the Carroll School of Management of Boston College. Dr. Bradshaw received a Ph.D. from the University of Michigan Business School, and earned a BBA summa cum laude with highest honors in accounting and master's degree in financial accounting from the University of Georgia. He previously taught at University of Chicago, Harvard Business School, and University of Georgia. He has been a Certified Public Accountant since 1991 and was an auditor for Arthur Andersen & Co. in Atlanta. Bradshaw conducts research on capital markets, specializing in the examination of securities analysts and related financial reporting issues. His research has been published in a variety of academic and practitioner journals, and he currently serves as Associate Editor for both Journal of Accounting and Economics and Journal of Accounting Research, is on the Editorial Board of The Accounting Review, and is a reviewer for numerous accounting and finance journals. He has also authored a book with Brian Bruce, Analysts, Lies, and Statistics – Cutting through the Hype in Corporate Earnings Announcements. Approximately twenty pounds ago, Bradshaw was an accomplished cyclist. Currently focused on other pursuits (including the co-administration of the lives of two toddlers), he still routinely passes younger and thinner cyclists.