Financial Statement Analysis: Qualitative Techniques (Portfolio 5122)
This Portfolio explains how analysts and other users of financial statements employ various qualitative techniques to improve the usefulness of the information in those statements.
Bloomberg Tax and Accounting Portfolio 5122-3rd, Financial Statement Analysis: Qualitative Techniques, explains how analysts and other users of financial statements employ various qualitative techniques to improve the usefulness of the information contained in those statements. A wide range of recognition, measurement, and disclosure principles used in preparing financial statements are described and illustrated. This work complements other Portfolios in the Accounting Policy and Practice Series that focus on specific accounting subjects.
This Portfolio is organized as follows. After introducing in Sections I, II, and III financial statement analysis and the system of financial reporting used by U.S.-based organizations, Section IV describes five steps typically involved in qualitative analyses. Sections V, VI, and VII illustrate how those steps are employed to analyze items reported in general-purpose external financial statements—balance sheets, income statements, and statements of cash flows. Sections VIII and IX address additional information reported in financial statement notes, SEC filings, press releases, and other sources that help users of financial statements better understand organizations and the environments in which they operate. Section VIII addresses qualitative analyses of related party transactions, executive and board compensation, and corporate governance; Section IX covers risk management and hedging activities, off balance sheet financing, acquisitions and divestitures, consolidation policy, subsequent events, international operations, and auditors’ reports and management certifications. The Portfolio’s Worksheets illustrate the types of information commonly used in qualitative financial statement analyses of U.S. public companies, including sample disclosures taken from companies’ financial statements, notes to the financial statements, Management’s Discussion and Analysis (MD&A), regulatory filings and other sources.
Qualitative financial statement analyses involve examining financial statement information and related disclosures to improve their usefulness in assessing organizations’ financial circumstances and performance. Complete financial statement analyses, however, include using various quantitative techniques, such as ratio analyses, to measure various aspects of the organizations’ financial condition and performance. Companion APP 5133-2nd, Financial Statement Analysis: Quantitative Techniques—Analyzing Liquidity, Profitability, and Asset Utilization and APP 5134-2nd, Financial Statement Analysis: Quantitative Techniques—Analyzing Solvency, Price Multiples, and Cash Flow describe and illustrate quantitative financial statement analyses.
This Portfolio may be cited as Bloomberg Tax and Accounting Portfolio 5122-3rd, Glazer and Stevens, Financial Statement Analysis: Qualitative Techniques (Accounting Policy and Practice Series).
Table of Contents
I. Scope and Purposes of Portfolio
II. Uses of Financial Statement Analysis
III. The U.S. Financial Reporting System
IV. Steps in Qualitative Financial Statement Analysis
V. Qualitative Balance Sheet Analysis
VI. Qualitative Income Statement Analysis
VII. Qualitative Analysis of Statements of Cash Flows
VIII. Qualitative Analysis of Related Party Transactions, Corporate Governance and Compensation Issues
IX. Other Areas for Qualitative Analyses
X. Summary and Conclusions
Stager Professor of Business
Franklin and Marshall College
Professor of Finance
University of Maryland University College