Financial Statement Analysis and Security Valuation
This book describes valuation as an exercise in financial statement analysis. Students learn to view a firm through its financial statements and to carry out the appropriate financial statement analysis to value the firm’s debt and equity. The book takes an activist approach to investing, showing how the analyst challenges the current market price of a share by analyzing the fundamentals. With a careful assessment of accounting quality, accounting comes to life as it is integrated with the...
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This book describes valuation as an exercise in financial statement analysis. Students learn to view a firm through its financial statements and to carry out the appropriate financial statement analysis to value the firm’s debt and equity. The book takes an activist approach to investing, showing how the analyst challenges the current market price of a share by analyzing the fundamentals. With a careful assessment of accounting quality, accounting comes to life as it is integrated with the modern theory of finance to develop practical analysis and valuation tools for active investing.
1Introduction to Investing and Valuation22Introduction to the Financial Statements26Pt. IInvestment Returns, Valuation Models, and the Financial Statements3Investment Returns664Valuation Models and Forecasting Dividends and Cash Flows965Accounting Measurement and Valuation from Earnings Forecasts1306An Accrual Accounting Valuation Model164Pt. IIThe Analysis of Financial Statements7Business Activities and Financial Statements2108The Analysis of the Statement of Shareholders' Equity2329The Analysis of the Balance Sheet and Income Statement26610The Analysis of the Cash Flow Statement30811The Analysis of Profitability33612The Analysis of Growth and Sustainable Earnings376Pt. IIIForecasting and Valuation Analysis13Valuation of Operations and the Analysis of Price-to-Book Ratios41614Simple Forecasting and Simple Valuation45415Full-Information Forecasting, Valuation, and Business Strategy Analysis48416The Analysis of Price-Earnings Ratios526Pt. IVAccounting Analysis and Valuation17Creating Accounting Value and Economic Value55818The Quality of the Current Accounting59419The Quality of Forecasted Accounting644Pt. VThe Analysis of Risk20The Analysis of Equity Risk and the Cost of Capital68421The Analysis of Credit Risk718AppA Summary of Formulas745Index761
