Accounting analysis: the basics - Steps in accounting analysis
4 important questions on Accounting analysis: the basics - Steps in accounting analysis
What are the steps in accounting analysis:
asses accounting flexibility
evaluate accounting strategy
evaluate the quality of disclosure
identify potential red flags
recast financial statements and undo accounting distortions
Since all of these policy choices can have a significant impact on the reported performance of a firm, they offer ...
Some of the strategy questions one could ask in examining how managers exercise their accounting flexibility include the following:
deviations from the norm
accounting changes
past accounting errors
structuring of transactions
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In assessing a firms disclosure quality, an analyst could ask about the following subjects:
accounting choices
discussion of financial performance
non-financial performance information
segment information
bad news
investor relations
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