Implication for financial analysis

Analyst should: Be aware of new product and innovation in financial market Effect that new product and transactions have on financial statement Monitor company disclosures

Coherent financial reporting framework

Characteristics:  Transparency: full disclosure and fair presentation and reveal economics of the company Comprehensiveness: should include all kinds of transactions including new types  Consistency:  Similar

Roles of FS

Standard-setting bodies Accountants and auditors that establish financial reporting standard  Two primary bodies are: FASB and IASB Regulatory authorities  Government agencies that have legal authority

FS objectives and standards

Objectives  Provide information about the firm to current and potential investors, lenders Accounting standard is to put financial statement in uniform Importance Reporting standard →