Financial statement analysis : firms’ analysis and valuation

The book provides a gradual approach to understanding and analysis financial statements, grasp the fundamentals to analyze earnings quality levels of firm financial reporting; and provide main tools for approach-ing firms’ valuations using accounting information. The first part of the book (Chapter 1 and 2) covers basic accounting concepts and recalls the main information conveyed through financial statements. This is in-strumental to align the reader with the needed knowledge to analyze fi-nancial statements. Financial Statement Analysis is discussed as central part of the book (Chapter 3), where tools and techniques to properly understand firms’ soundness and financial performance are provided. As Financial Statement Analysis distinguishes itself from other ap-proaches in a way that it uses publicly available information – external perspective - to form a basis of decision, instead of relying on speculation, the quality of financial information disseminated is crucial. To that end, Chapter 4 elaborate on the quality of earnings discussing determinants and consequences of different earnings quality levels, in connection with proxy to measure quality levels. The book concludes with an introducto-ry, though complete, discussion of accounting based methodologies for firms’ valuations. Valuation is a key topic bridging accounting and fi-nance and the reader towards the end of the book will get familiar with the most common valuation tools using accounting data.