Financial Statement Analysis

Essay text:

( anybody can get hold of an annual report, it is always obligated for listed companies. Financial report for private companies: • Balance sheet • Cash flow • Profit and cost account < It is more difficult to see into a financial report of private companies because they are not obligated to publish it. |Code Lippens = corporate governance rules for listed companies (BEL-20) | |Code Buysse = corporate governance rules for private companies | Accounting rules: 1) IFRS (Intern Financial Reporting Standards) 2) Objectives • to make sure that you can analyze and evaluate along the same rules the financial reports in all countries in the same way • to create a harmony • all listed companies are obligated to follow the IFRS-rules • to create transparency, to make the information available for everyone who wants it The financial reports are analyzed by the big for or others: • PwC • Deloitte • KPMG • Ernst & Young 3) Fair value = The value of a company as it exists today LIQUIDITY: the ability to turn something into liquidity (easier for an industrial company then for a bank, an industrial company has fixed assets like machines which can easily be turned into money, a bank only has the buildings) ASSETS: what does the company own? (hard for a service company ‘cause they have nothing to turn into liquidity) Examples: Sainsbury’s ( the value of their assets is more than their turnover Service & manufacturing: sell your assets and lease them, ONLY if you need cash!!! |Companies that are able to turn assets into liquidity are the ones that will survive | ( If companies need cash they go into depth and pay interest, if there is no money to lent, they stop growing and expanding and they will need to lay off people What happens between one year and the next? !!!Important influence!!! LIBOR = The London Interbank Offered Rate is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market...