International Financial Statement Analysis

International Financial Statement Analysis

International Financial Statement Analysis

International Financial Statement Analysis
International Financial Statement Analysis

Analysis of financial statements is a deliberative process in order to help evaluate the financial position and results of operations in the present and past, in order to determine the estimates and predictions are most likely about the condition and performance of companies in the future. Analysis of financial statements, but in fact many in the present study the authors use financial ratio analysis because this analysis is more frequently used and simpler.
A. ANALYSIS OF INTERNATIONAL BUSINESS STRATEGIES
Analysis of business strategy is an important first step in the analysis of financial statements. This analysis provides a qualitative understanding of the company and its competitors related to the economic environment. By identifying the drivers of profit and risk factor is the main business, business strategy or business analysis will help the analyst to make a realistic prediction.
The difficulties of analysis of international business strategy:
a. Availability of information analysis business strategy particularly difficult in some countries due to lack andalnya information about macroeconomic developments. Obtain information about the industry is also very difficult in many countries and the number and quality of information companies are very different. Availability of specific information about the company is very low in developing countries. Lately, many large companies that keep records and raise capital in foreign markets and have expanded their disclosure voluntarily switch to accounting principles that are recognized globally as an international financial reporting standards.
b. Recommendations for the analysis of data limitations make the effort to analyze the business strategy by using traditional research methods to be difficult. Often frequent trips to study the local business climate and real bagaimanan industry and company operations, particularly in emerging market countries.
2. ANALYSIS OF ACCOUNTING
The purpose of accounting analysis is to analyze the extent to which the company reported results reflect the economic reality. Analysts need to evaluate kebujakan and accounting estimates, and analyze the nature and flexibility lungkup accounting of a company. The managers of the company is allowed to make a lot of considerations related to the accounting, because they know more about the financial condition and operations of their companies. Reported earnings is often used as a basis for evaluating the performance of their management.
Step-langah in doing evalusai accounting quality of a company:
a) Identify the main accounting policies
b) Analyze the flexibility of accounting
c) Evaluate the accounting strategy
d) Evaluate the quality of disclosure
e) Indentifikasikanlah potential problems
f) Make adjustments for accounting distortions
3. INTERNATIONAL FINANCIAL ANALYSIS (ALKI)
Required due to the increasing tendency of international investment and be done with the intention that the financial data can be compared. Sources of information for international financial statement analysis are:
– The financial statements, supporting schedules and notes to financial statements – Background of company and its disclosure.
Analysis techniques that have been used International Finance are:
– Trend Analysis Comparing the data items periodically for 2 years or more like a trend of profits, debt ratings, changes in revenue, etc. geometric growth.
– Ratio Analysis Comparing one item with another item of financial statements in order to obtain a common understanding of the company’s profitability, leverage, liquidity and efficiency.
Returns indicators:
* Income per share = net profit growth of common shares Total shares of common stock outstanding * Return on assets = Net income Total Assets * Return on equity = Net income for the owner Equity Liquidity and Risk Indicators: Current Ratio = Current Assets Good debt * Debt to equity ratio = Total Debt Equity owners
4. Difficulties In Getting International Accounting
In obtaining the data of International Accounting, there are several difficulties, among others:
a. Depreciation Depreciation expense adjustment will affect profits, it is necessary to consider the age of the functions that must be decided asset management.
b. LIFO to FIFO inventory adjustment supplies should be converted into the FIFO method
c. Backup Backup is the company’s ability to pay or cover expenses for removing the load.
d. Financial Statement Adjustments reformulation of some of the changes after a few calculations on the points above TSB.
5. MECHANISM TO RESOLVE DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES OF STATE
Several approaches can be done, namely: – Some analysts present foreign accounting resize according to a group of internationally recognized principles or according to other, more general basis. – Some others develop a complete understanding of accounting practices in a particular group of countries and limited their analysis to firms located in these countries.
6. DIFFICULTIES AND WEAKNESS IN THE INTERNATIONAL FINANCIAL ANALYSIS
a. Information access Information on thousands of companies from around the world have been widely available in recent years. Sources of information in countless numbers up through the World Wide Web (WWW). Companies in the world today have a website and annual report are available for free of charge from various other sources.
b. Timeliness of information timeliness of financial reports, annual reports, reports to regulators vary in each country.
c. Barriers of language and terminology.
d. Foreign currency issues. e. Differences in the type and format of financial statements.
7. Use of the Website or the WWW (world wibe web)
To Obtain Information Research Company Many companies do not make optimum use of disclosure of corporate information via the website, both for financial and corporate sustainability. Another finding in this study is that many companies can not provide information for investors, most of the information presented in the company’s website is about the products or services produced and the many companies that do not update the information presented.

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