INTERNATIONAL FINANCIAL

INTERNATIONAL FINANCIAL

STATEMENT ANALYSIS

CFA Institute is the premier association for investment professionals around the world, with over 124,000 members in 145 countries. Since 1963 the organization has developed and ad- ministered the renowned Chartered Financial Analyst® Program. With a rich history of leading the investment profession, CFA Institute has set the highest standards in ethics, education, and professional excellence within the global investment community and is the foremost authority on investment profession conduct and practice. Each book in the CFA Institute Investment Series is geared toward industry practitioners along with graduate-level fi nance students and covers the most important topics in the industry. Th e authors of these cutting-edge books are themselves industry professionals and academics and bring their wealth of knowledge and expertise to this series.

INTERNATIONAL FINANCIAL

STATEMENT ANALYSIS

Th ird Edition

Th omas R. Robinson, CFA

Elaine Henry, CFA

Wendy L. Pirie, CFA

Michael A. Broihahn, CFA

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ISBN 9781118999479 (Hardcover) ISBN 9781119029748 (ePDF) ISBN 9781119029755 (ePub)

Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1

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CONTENTS

Foreword xvii

Preface xix

Acknowledgments xxi

About the CFA Investment Series xxiii

CHAPTER 1 Financial Statement Analysis: An Introduction 1

Learning Outcomes 1 1. Introduction 1 2. Scope of Financial Statement Analysis 2 3. Major Financial Statements and Other Information Sources 7

3.1. Financial Statements and Supplementary Information 8 3.2. Other Sources of Information 27

4. Financial Statement Analysis Framework 28 4.1. Articulate the Purpose and Context of Analysis 30 4.2. Collect Data 30 4.3. Process Data 31 4.4. Analyze/Interpret the Processed Data 31 4.5. Develop and Communicate Conclusions/Recommendations 32 4.6. Follow-Up 32