Corporate Financial Reporting and Analysis (3^rd Ed.)

Corporate Financial Reporting and Analysis: A Global Perspective/3e by David Young and Jacob Cohen is an introductory textbook on financial reporting for MBA students. This book is intended to offer the rigor and comprehensive coverage required of an MBA text, while at the same time offering an accessible and practical reference for participants in executive programs. David Young is based at INSEAD Business School in France, and Jacob Cohen is based at MIT Sloan School of Management in the USA.

This book offers a rigorous, yet accessible, treatment of contemporary financial reporting practice. Examples are drawn from a broad range of companies to illustrate key concepts. Particular emphasis is given to the latitude and flexibility granted to managers in reporting financial performance, and the steps that financial statement readers can take to identify potential trouble areas in the accounts. Topics include the analysis and interpretation of the three principal financial statements, revenue recognition, inventory accounting, receivables and bad debts, accounting for long–term assets, provisions and contingencies, income taxes, and the accounting for mergers and acquisitions.

A unique feature of this book is the seamless way in which it deals with differences in U.S. GAAP and IFRS. Both regimes are covered simultaneously, i.e. when a topic is discussed, including the relevant journal entries and disclosures, the discussion applies equally to GAAP companies and to IFRS companies. It doesn t matter whether the company used in a given example is from the U.S., Europe, or elsewhere. Thanks to the ongoing GAAP/IFRS convergence project, the two regimes are close enough to allow for a somewhat generic approach that allows for coverage of both regimes at the same time. In this way, the examples that are covered in the book are relevant to all readers, regardless of which regime dominates in their business environment.

The content of this book has been classroom tested over the past 20 years at INSEAD with the MBA class which has students from 80 different countries.

About the Authors xvii

1 An Introduction to Financial Statements 1

2 The Balance Sheet and Income Statement 31

3 A Brief Overview of GAAP and IFRS: the Framework for Financial Accounting 56

4 Revenue Recognition 64

5 The Statement of Cash Flows 96

6 Financial Statement Analysis 149

7 Business Valuation and Financial Statement Analysis 200

8 Accounting for Receivables and Bad Debts 218

9 Accounting for Inventory 252

10 Accounting for Property, Plant and Equipment 275

11 Leases and Off–Balance–Sheet Debt 298

12 Accounting for Bonds 312

13 Provisions and Contingencies 327

14 Accounting for Pensions 346

15 Accounting for Income Tax 363

16 Accounting for Shareholders Equity 386

17 Marketable Securities and Investments 411

18 Accounting for Mergers and Acquisitions 434

Appendix Tables for Present Value and Future Value Factors 449

Index 455

S. David Young is Professor of Accounting & Control at INSEAD, where he has been since 1989. He holds a PhD from the University of Virginia and is both a Certified Public Accountant (USA) and a Chartered Financial Analyst. His primary areas of expertise are corporate financial reporting and value based management, with works published in a wide variety of academic and professional journals, including Harvard Business Review, Journal of Investing and the Journal of Applied Corporate Finance.
Professor Young is the author or co-author of several books, including EVA and Value Based Management: A Practical Guide to Implementation (McGraw-Hill, 2001), Profits You Can Trust: Spotting and Surviving Accounting Landmines (Financial Times Prentice Hall, 2003), and Attracting Investors: A Marketing Approach to Finding Funds for Your Business (John Wiley & Sons, 2004). His most recent book project is titled Blue Line Management: What Managing for Value Really Means, which should appear in the first half of 2012.
Professor Young is also the recipient of several Outstanding Teaching Awards from the INSEAD MBA program, and the Distinguished Alumni Scholar Award from his undergraduate alma mater, The George Washington University. He has consulted extensively for companies in Europe, the U.S. and Asia, mainly on issues related to value based management and financial analysis.

Professor Jake Cohen teaches courses in Financial and Managerial Accounting, Financial Statements Analysis, Mergers & Acquisitions, Corporate Restructurings, and Business Law at both INSEAD's Singapore and Fontainebleau campuses.
Prior to joining INSEAD, Professor Cohen was a Senior Teaching Fellow in the Accounting & Control group at the Harvard Business School, where he was a founding member and an accounting professor in the Analytics Program, and a Professor at the Harvard Extension Schoo