Diamond Foods, Inc.: A Comprehensive Case in Financial Analysis and Valuation

2018 ◽  
Vol 34 (1) ◽  
pp. 13-33
Author(s):  
Mahendra R. Gujarathi
Keyword(s):  
Real World ◽  
Financial Analysis ◽  
Real Earnings Management ◽  
Financial Statement ◽  
Stock Valuation ◽  
Financial Analyst ◽  
Problem Solving Skills ◽  
Holistic Understanding ◽  
Available Information

ABSTRACT This real-world comprehensive case provides an experiential assignment to bring alive most major topics addressed in the financial statement analysis and valuation course. By demonstrating the interconnections between different topics, the case also serves as an integrative assignment to develop a holistic understanding of the course. The case presents a platform to develop students' critical-thinking and problem-solving skills. By requiring them to apply the frameworks of strategy and industry analysis, techniques of accounting and financial analysis, and by placing them in the role of a financial analyst, the case develops an understanding of the challenges involved in financial analysis and valuation in a real-world context. The case helps students to experience the power of using financial statements and other publicly available information to derive insights into firm valuation and to appreciate the role of accruals-based and real earnings management in stock valuation.

scholarly journals ELEMENTS OF ACCOUNTING POLICY SELECTION AND ITS INFLUENCE ON FINANCIAL STATEMENTS INDICATORS

2019 ◽  
pp. 158-162
Author(s):  
O. Ageeva ◽  
D. Formusatii
Keyword(s):  
Financial Analysis ◽  
Financial Statements ◽  
Financial Statement ◽  
Sources Of Information ◽  
Management Decisions ◽  
Financial Analyst ◽  
Valuation Methods ◽  
Policy Selection ◽  
The Impact ◽  
Accounting Policy

In this article, the authors consider reasons for development of variety of accounting policies and examine influencing of selected accounting policy elements on valuation of financial statements indicators. Obviously financial statements indicators are definitely one of the most important sources of information for financial analysis and management decisions. Financial analyst should be aware, which valuation methods have been presented in this financial statement, and how they influence on formulated by him analytical conclusions. The approach presented in the article to the assessment of the impact of accounting policies on the financial statements’ indicators and the conclusions formulated by the authors as a result of the research allows to get answers to these issues.

scholarly journals Topics In Finance Part II - Financial Analysis

2010 ◽  
Vol 3 (3) ◽  
pp. 81-88
Author(s):  
Judy Laux
Keyword(s):  
Financial Management ◽  
Financial Analysis ◽  
Financial Statement ◽  
Managerial Behavior ◽  
Financial Statement Analysis ◽  
Stock Valuation

The second article in a series designed to supplement the introductory financial management course, this essay addresses financial statement analysis, including its impact on stock valuation, disclosure, and managerial behavior.

Singapore Airlines: Accounting for Income Taxes

2002 ◽  
Vol 06 (02) ◽  
pp. 241-254
Author(s):  
Winston Kwok ◽  
Yew Kee Ho
Keyword(s):  
Accounting Standards ◽  
Income Taxes ◽  
Financial Statement ◽  
Financial Analyst ◽  
Deferred Taxes ◽  
Accounting Courses ◽  
Accounting Changes ◽  
Accounting For Income Taxes ◽  
The Impact

Singapore Airlines: Accounting for Income Taxes. A proposed standard on accounting for income taxes would affect the bottomline figures of many companies in Singapore, including a major international company, Singapore Airlines Ltd (SIA). Students have to assume the role of a financial analyst who would have to assess the impact of the change. This is a case that introduces some of the more contentious issues relating to deferred taxes and can be used in intermediate or advanced accounting courses, M.B.A. or executive programs, and courses in financial statement analysis. The objectives of the case are threefold. First, it helps students understand better the conceptual issues associated with deferred taxes. Secondly, it requires students to assess the impact of the proposed accounting changes on key financial figures and ratios. Thirdly, it engages the student to discuss the strategic implications of accounting standards on taxes in relation to management's ability to manage their bottomline numbers.

WaMu's Option-ARM Strategy

2014 ◽  
Vol 29 (4) ◽  
pp. 557-575
Author(s):  
Robert M. Bowen ◽  
S. Jane Jollineau ◽  
Barbara A. Lougee
Keyword(s):  
Business Strategy ◽  
Deposit Insurance ◽  
Financial Statement ◽  
Financial Analyst ◽  
The Great Depression ◽  
Savings And Loan ◽  
Federal Deposit Insurance ◽  
Loan Losses

ABSTRACT At the end of 2007, Washington Mutual, Inc. (generally known as “WaMu”) was the largest savings and loan bank in the U.S., based on assets ($328 billion) and revenue ($25.5 billion). Less than nine months later, WaMu was seized by federal regulators and sold to JPMorgan Chase for $1.9 billion in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC). During the worst recession since the Great Depression, WaMu became the largest U.S. bank failure in history. This case illustrates how a financial institution's business strategy affects risk and how these characteristics are revealed in the financial statements. Students assume the role of a financial analyst examining WaMu's 2007 10-K after its release in March 2008. In particular, they evaluate the quality of WaMu's loans and the adequacy of WaMu's estimates for loan losses, one of the most important discretionary accruals for financial institutions. Students gain insights into the consequences of WaMu's business strategy to emphasize high-margin loan products by comparing WaMu to (1) the relatively conservative Wells Fargo Bank and (2) the average large FDIC bank. This case has been used successfully in graduate-level financial statement analysis courses.

scholarly journals Key Aspects of Corporate Activities Analysis through the Prism of Domestic Studies

2017 ◽  
pp. 69-77
Author(s):  
О. A. Zorina ◽  
V. V. Riabinina
Keyword(s):  
Financial Stability ◽  
Financial Analysis ◽  
Accounting System ◽  
Business Units ◽  
Financial Condition ◽  
Key Aspects ◽  
Available Information ◽  
Goals And Objectives ◽  
Financial Recovery

Today, the corporate sector features the considerably higher risks of corporate performance with the accordingly higher standards of accountability for results, which largely depend on objectivity, timeliness and comprehensiveness of assessment of the existing and expected financial performance of corporations. This enhances the role and significance of an important analytical field, the corporate activities analysis. The role of economic analysis in the context of market economy and globalization can hardly be overestimated, since the analysis permeates all the operative phases of a corporation. It precedes planning of indicators for the next period, helping organize production processes in a rational and reasonable way, improve collection and processing of information on their progress in the accounting system, assess the situation, and formulate important propositions to correct deficiencies and introduce best practices. Financial analysis is important in the economic operation of a corporation as it enables it to seek reserves to improve its financial condition; to assess the adequacy of use of all the types of financial resources; to take timely measures to improve the solvency, liquidity and financial stability; to ensure optimal production and social development by use of reserves found through the analysis; to develop plans for financial recovery. Methodology and organization of the corporate activities analysis is conditional on the organization and operation specifics of corporate enterprises. The following characteristics of a corporation are covered by analysis: economic activity; technological and organizational structure; interaction of business units within a corporation; capitalization; budgeting; integration of information system for analysis; variability in the conditions of risk. The review of studies devoted to corporate activities analysis shows that domestic and foreign experts offer different methods for analysis of financial statements, depending on the goals and objectives of the analysis, available information, technical support, the efficiency of solutions for analytical and management tasks, experience and qualification of staff. The corporate activities analysis will be more objective when new analysis concepts are adopted, focused on the future.

Comprehensive Income: which potential effects on firms' performance evaluation and users' decision process?

2016 ◽  
pp. 55-94
Author(s):  
Pier Luigi Marchini ◽  
Carlotta D'Este
Keyword(s):  
Performance Evaluation ◽  
Decision Process ◽  
Financial Analysts ◽  
Listed Companies ◽  
Financial Statement ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Gains And Losses ◽  
The Impact

The reporting of comprehensive income is becoming increasingly important. After the introduction of Other Comprehensive Income (OCI) reporting, as required by the 2007 IAS 1-revised, the IASB is currently seeking inputs from investors on the usefulness of unrealized gains and losses and on the role of comprehensive income. This circumstance is of particular relevance in code law countries, as local pre-IFRS accounting models influence financial statement preparers and users. This study aims at investigating the role played by unrealized gains and losses reporting on users' decision process, by examining the impact of OCI on the Italian listed companies RoE ratio and by surveying a sample of financial analysts, also content analysing their formal reports. The results show that the reporting of comprehensive income does not affect the financial statement users' decision process, although it statistically affects Italian listed entities' performance.

What's Happening to Profits at Cazenovia Creations?

2013 ◽  
Vol 8 (1) ◽  
pp. 24-29 ◽  
Author(s):  
Margaret Garnsey ◽  
Andrea Hotaling
Keyword(s):  
Financial Analysis ◽  
Financial Statements ◽  
Internal Controls ◽  
Net Income ◽  
Database Query ◽  
Microsoft Access ◽  
Level Data ◽  
Query Tool ◽  
Transaction Level

ABSTRACT In this case, students assume the role of an accounting professional asked by a client to investigate why net income is not as strong as expected. The students must first analyze a set of financial statements to identify areas of possible concern. After determining the areas to investigate, the students use a database query tool to see if they can determine causes by examining transaction level data. Finally, the students are asked to professionally communicate their findings and recommendations to their client. The case provides students with experience in using query-based approaches to answering business questions. It is appropriate for students with basic query and financial analysis skills and knowledge of internal controls. A Microsoft Access database with transaction details for the final seven months of the current year as well as financial statements for the current and prior year are provided.

PENGARUH MANAJEMEN LABA TERHADAP ABNORMAL RETURN

2009 ◽  
Author(s):  
Zirman Zirman ◽  
Lily Lily
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Significant Influence ◽  
Stock Price ◽  
Abnormal Return ◽  
Real Earnings Management ◽  
Financial Statement ◽  
Discretionary Accrual ◽  
Stock Price Reaction ◽  
Flow Components

This research investigates the consequence of earnings management by analyzing stock price reaction to the full set financial statement in 2008 which can be used by investors to detect earnings management by the firms. This research investigated two forms of earnings management (accrual and real earnings management). The samples is drawn from firms in IDX Statistic 2008 which categorized as active in frequency, value or volume. The method of analysis of this research used multi regression. The results show (1) discretionary accrual had negative significant influence to abnormal return, (2) abnormal cash flow from operation had negative significant influence to abnormal return. The results implicate that the investors are aware of the accrual earnings management (discretionary accrual) and real earnings management (abnormal cash flow) components in the earnings reported by the firms and they react negative to this components.

Additional Evidence on Audit Report Lag

2001 ◽  
Vol 20 (1) ◽  
pp. 137-146 ◽  
Author(s):  
W. Robert Knechel ◽  
Jeff L. Payne
Keyword(s):  
Earnings Quality ◽  
Financial Statements ◽  
Financial Statement ◽  
Fiscal Year ◽  
Sources Of Information ◽  
Audit Report ◽  
The Public ◽  
Time Period ◽  
Audit Team ◽  
Available Information

The process for providing accounting information to the public has not changed much in the last century even though the extent of disclosure has increased signifi-cantly. Sundem et al. (1996) suggest that the primary benefit of audited financial statements may not be decision usefulness but the discipline imposed by timely confirmation of previously available information. In general, the value of information from the audited financial statement will decline as the audit report lag (the time period between a company's fiscal year end and the date of the audit report) increases since competitively oriented users may obtain substitute sources of information. Furthermore, the literature on earnings quality and earnings management suggests that unexpected reporting delays may be associated with lower quality information. The purpose of this paper is to extend our understanding about the determinants of audit report lag using a proprietary database containing 226 audit engagements from an international public accounting firm. We examine three previously uninvestigated audit firm factors that potentially influence audit report lag and are controllable by the auditor: (1) incremental audit effort (e.g., hours), (2) the resource allocation of audit team effort measured by rank (partner, manager, or staff), and (3) the provision of nonaudit services (MAS and tax). The results indicate that incremental audit effort, the presence of contentious tax issues, and the use of less experienced audit staff are positively correlated with audit report lag. Further, audit report lag is decreased by the potential synergistic relationship between MAS and audit services.

Intertheatricality and Propaganda

2017 ◽  
Author(s):  
Laurence Publicover
Keyword(s):  
Early Modern ◽  
Real World ◽  
The Political ◽  
Merchant Of Venice ◽  
The Merchant Of Venice ◽  
Political Background ◽  
Controversial Nature

This chapter analyses the ways in which the collaborative drama The Travels of the Three English Brothers defends the Sherley brothers’ real-world political endeavours across Europe and Persia through its intertheatrical negotiations. Explaining the political background of those endeavours and their controversial nature, it illustrates how the playwrights liken the Sherleys to the heroes of dramas that had been popular on the early modern stage over the preceding twenty years, in particular Tamburlaine and The Merchant of Venice. It also examines the significance of Francis Beaumont’s specific parody, in The Knight of the Burning Pestle, of an episode in Travels in which the Persian Sophy acts as godfather to the child of Robert Sherley. The chapter concludes with a discussion of the role of playing companies in shaping dramatic output.

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