Question

PLEASE ANSWER THE QUESTIONS BELOW according to international accounting

Question 1,2,3,4,12,13 should be prepared in writing

1. Discuss four stages of financial statement analysis. Why at each step is analysis in a cross-border context more difficult than in a single-country?

2. Discuss special issues that you think important in analyzing financial statements of foreign companies.

3. Discuss possible adjustable and non-adjustable differences in international financial statement analysis.

4. How will you make general assessment of a countries accounting quality?

5. Discuss general structure of form 10k and 20f.

6. Discuss purpose & general structure of each of the main financial statements.

7. Discuss commonly used financial ratios & their interpretation.

8. Discuss earnings quality and factors that could reduce earnings quality.

9. Discuss the differences betw. NI & CFO. Why a growing difference is considered

   as a red flag for poor accounting quality?

10. Discuss the meaning of free cash flow.

11. What are the most frequently disclosed types of material differences between US

    GAAP and foreign GAAP in the form 20f reconciliation. Is US GAAP income

    usually larger or smaller than net income reported in home country GAAP? Why?

12. Discuss the adjustment procedures from Japan GAAP to US GAAP for the

    Financial Statements of Nisson Corporation.

13. Discuss the adjustment procedures from the pooling to purchase accounting

    method for Star and Paterson financial statement.

Answer 1

The four stages of financial statement analysis are as follows-

1) Comparing the financial statements for two to five years - Under this stage, financial figures of one year are compared with that of another year i.e. intra-firm analysis, inter-firm comparison within the same industry and comparing budgeted with actual figures.

2) Ratio analysis- Under this stage, different types of ratios are calculated to measure the relationship in respect of financial performance, liquidity, profit margin and operational efficiency with respect to companies over a period of time and between the companies within the same industry group.

3) Fund flow analysis- Under this stage, a statement is prepared which contains the details regarding the sources and uses of funds in and out of the business. The purpose of it is to track down the movements which involve an exchange of assets. In simple words, it is generally considered as the report of financial operations of a company.

4) Trend analysis- This stage comprises of comparison of some important ratios and growth rate over a time period to highlight the extent of improvement or deterioration over a period of time in certain aspects.

The above stages of analysis get a little complex in case of a cross border context because of differences in functional currency of the country in which the company operates and those of the other company, economic environment prevalent in different countries, applicable financial reporting frameworks, accounting policies and standards used in preparing the financial statements. These practicable difficulties make the above analysis a little bit cumbersome.