Financial Reporting, Financial Statement Analysis and Valuation,
8th Edition

1. Overview of Financial Reporting, Financial Statement Analysis, and Valuation.
2. Asset and Liability Valuation and Income Recognition.
3. Income Flows versus Cash Flows: Understanding the Statement of Cash Flows.
4. Profitability Analysis.
5. Risk Analysis.
6. Financing Activities.
7. Investing Activities.
8. Operating Activities.
9. Accounting Quality.
10. Forecasting Financial Statements.
11. Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach.
12. Valuation: Cash-Flow Based Approaches.
13. Valuation: Earnings-Based Approaches.
14. Valuation: Market-Based Approaches.
Appendix A: Financial Statements and Notes for PepsiCo, Inc. and Subsidiaries.
Appendix B (online): Management's Discussion and Analysis for PepsiCo, Inc. and Subsidiaries.
Appendix C (online): Financial Statement Analysis Package (FSAP).
Appendix D (online): Financial Statement Ratios: Descriptive Statistics by Industry and by Year.
Index.

• James M. Wahlen

  James M. Wahlen is the James R. Hodge Chair of Excellence, professor of accounting, former chair of the accounting department, and the former chair of the M.B.A. program at the Kelley School of Business at Indiana University. Dr. Wahlen received his Ph.D. from the University of Michigan and has served on the faculties of the University of North Carolina at Chapel Hill, the University of Washington and Pacific Lutheran University. He has also been a visiting professor at the University of Chicago, INSEAD and Sungkyunkwan University. Dr. Wahlen’s teaching and research interests focus on financial accounting, financial statement analysis and the capital markets. He investigates financial statements analysis, testing the extent to which earnings and other financial statement information can predict future stock returns, earnings quality and earnings management, earnings volatility as an indicator of risk, fair value accounting for financial instruments and accounting for loss reserve estimates by banks and insurers. His research has been published in a wide array of academic and practitioner journals in accounting and finance. He has public accounting experience in both Milwaukee and Seattle and is a member of the American Accounting Association. Dr. Wahlen has received numerous teaching awards during his career. In his free time, he enjoys spending time with his wife and daughters, spoiling his adorable granddaughters, playing outdoor sports (biking, hiking, skiing, golf), cooking (and, of course, eating), and listening to rock music (especially if it is loud and live).

• Stephen P. Baginski

  Stephen P. Baginski is the Herbert E. Miller Chair in Financial Accounting at the University of Georgia’s J.M. Tull School of Accounting. He received his Ph.D. from the University of Illinois, and he has taught a variety of financial and managerial undergraduate, M.B.A. and executive education courses at the University of Georgia, Indiana University, Illinois State University, the University of Illinois, Northeastern University, Florida State University, Washington University in St. Louis, the University of St. Galen, the Swiss Banking Institute at the University of Zurich, Bocconi and INSEAD. Dr. Baginski has published articles in a variety of journals including The Accounting Review, Journal of Accounting Research, Contemporary Accounting Research, Review of Accounting Studies, The Journal of Risk and Insurance, Accounting Organizations and Society and The European Accounting Review. His research primarily deals with the causes and consequences of voluntary management disclosures of earnings forecasts, and he also investigates the usefulness of financial accounting information in security pricing and risk assessment. Dr. Baginski has served on several editorial boards and as an associate editor at Accounting Horizons and The Review of Quantitative Finance and Accounting. He has won numerous undergraduate and graduate teaching awards at the department, college and university levels during his career, including the Doctoral Student Inspiration Award from students at Indiana University. Dr. Baginski loves to watch college football, play golf, and run (very slowly) in his spare time.

• Mark Bradshaw

  Mark T. Bradshaw is professor of accounting, chair of the department and William S. McKiernan ’78 Family Faculty Fellow at the Carroll School of Management of Boston College. Dr. Bradshaw received a Ph.D. from the University of Michigan Business School and earned a B.B.A. summa cum laude with highest honors in accounting and a master’s degree in financial accounting from the University of Georgia. He previously taught at the University of Chicago, Harvard Business School and the University of Georgia. Dr. Bradshaw was a certified public accountant with Arthur Andersen & Co. in Atlanta. Today, he conducts research on capital markets, specializing in the examination of securities analysts and financial reporting issues. His research has been published in a variety of academic and practitioner journals, and he serves as an editor for The Accounting Review and as associate editor for Journal of Accounting and Economics, Journal of Accounting Research and Journal of Financial Reporting. Dr. Bradshaw is also on the editorial board of Review of Accounting Studies and the Journal of International Accounting Research. In addition, he is a reviewer for numerous other accounting and finance journals. Dr. Bradshaw has authored a book with Brian Bruce: ANALYSTS, LIES, AND STATISTICS—CUTTING THROUGH THE HYPE IN CORPORATE EARNINGS ANNOUNCEMENTS. Approximately 25 pounds ago, Dr. Bradshaw was an accomplished cyclist. Currently focused on additional leisurely pursuits, he nevertheless routinely passes younger and thinner cyclists.

• The exposition of each chapter has been streamlined. Known for being a well-written, accessible text, this edition presents each chapter in more concise, direct discussion so that you can cover the key insights quickly and efficiently.

• The chapters now include quick checks after each section so that students can be sure that they have obtained the key insights after reading each section. In addition, each section and each of the end-of-chapter questions, exercises, problems, and cases is cross-referenced to learning objectives so that students can implement the critical skills and techniques associated with each of the learning objectives.

• To augment income statement quality, the chapters on accounting quality have been expanded to provide more in-depth analysis of balance sheet quality.

• Each chapter includes relevant, new discussion of current U.S. GAAP and IFRS and explains how U.S. GAAP compares with IFRS and how to deal with such differences in financial statement analysis. End-of-chapter materials contain many problems and cases involving non-U.S. companies, with application of financial statement analysis techniques to IFRS-based financial statements.

• The chapters provide a number of relevant insights from empirical accounting research that are pertinent to financial statement analysis and valuation.

• Six-Step Analysis Process: The book is structured using a comprehensive and logical six-step fundamental analysis process to evaluate financial statements and value firms. The six steps include economic analysis of the industry, strategic analysis of the firm, accounting quality analysis, profitability and risk ratio analysis, forecasting, and valuation. This framework provides a sensible and intuitive approach for you and your students.

• Balanced Approach: The text continues to offer a balanced and thorough treatment of the three main elements of financial statement analysis: analysis of firms' strategies (profitability and risk analysis with ratios), accounting quality analysis, and forecasting and valuation.

• Financial Statement Analysis Package (FSAP): Faculty and students who use the text also are entitled to use FSAP, which is an extensive Excel-based analysis package. FSAP provides you and your students with a powerful template package for ratios analysis, financial statement forecasting, valuation, and sensitivity analysis. You will find FSAP to be a useful tool for preparing cases and analyzing companies. Students find FSAP to be a useful tool for analyzing and valuing companies using the methods of the text.

• Real-World Companies Used Throughout: Numerous examples in the text--approximately ten per chapter--are based on the financial information of real-world public companies. Each chapter uses PepsiCo's 2008 financial statements as a continuing case to illustrate the techniques of the chapter. The end-of-chapter materials for each chapter also contain an integrative case involving Starbucks so that you can assign a continuing, integrative case for students to apply their learning. Students will recognize other examples of real-world companies used throughout the text, including Wal-Mart, Coca-Cola, Enron, Sun Microsystems, Amazon, Nokia, Microsoft, and General Electric.

• Accounting Quality: The chapters on accounting quality are structured to provide broader and deeper coverage of accounting for financing, investing, and operating activities. The organization provides a logical flow, beginning in Chapter 6 with a discussion of the determinants of accounting quality, how to evaluate accounting quality, and how to adjust reported earnings and financial statements to cleanse low-quality accounting items. The discussion proceeds across the primary business activities of firms in the natural sequence in which the activities occur--raising financial capital, investing that capital in productive assets, and operating the business. Chapter 7 discusses accounting for financing activities. Chapter 8 describes accounting for investing activities, and Chapter 9 deals with accounting for operating activities.

• Current IFRS and Codification Coverage: The text includes references to GAAP and IFRS as well as to the new Codification format so that students have the most relevant information.

• The chapters provide a number of relevant insights from empirical accounting research that are pertinent to financial statement analysis and valuation.

• The chapters now include quick checks after each section so that you can be sure that you have obtained the key insights after reading each section. In addition, each section and each of the end-of-chapter questions, exercises, problems, and cases is cross-referenced to learning objectives so that you can implement the critical skills and techniques associated with each of the learning objectives.

• Six-Step Analysis Process: The book is structured using a comprehensive and logical six-step fundamental analysis process to evaluate financial statements and value firms. The six steps include economic analysis of the industry, strategic analysis of the firm, accounting quality analysis, profitability and risk ratio analysis, forecasting, and valuation. This framework provides a sensible and intuitive approach.

• Balanced Approach: The text continues to offer a balanced and thorough treatment of the three main elements of financial statement analysis: analysis of firms' strategies (profitability and risk analysis with ratios), accounting quality analysis, and forecasting and valuation.

• Real-World Companies Used Throughout: Numerous examples in the text--approximately ten per chapter--are based on the financial information of real-world public companies. Each chapter uses PepsiCo's 2008 financial statements as a continuing case to illustrate the techniques of the chapter. The end-of-chapter materials for each chapter also contain an integrative case involving Starbucks, giving you a continuing, integrative case to apply your learning. You will recognize other examples of real-world companies, including Wal-Mart, Coca-Cola, Enron, Sun Microsystems, Amazon, Nokia, Microsoft, and General Electric.

• Financial Statement Analysis Package (FSAP): Students who use the text also are entitled to use FSAP, which is an extensive Excel-based analysis package. FSAP provides a powerful template package for ratios analysis, financial statement forecasting, valuation, and sensitivity analysis. You will find FSAP to be a useful tool for analyzing and valuing companies using the methods of the text.

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