INTERNATIONAL FINANCIAL ANALYSIS
PUTRI AYU PUSPA RENGGANIS
20208970
4EB11
Difficulties of international business strategy analysis and basic strategy for the collection of information.
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.
The difficulties of analysis of international business strategy:
1. . Availability of information analysis business strategy particularly difficult in some countries due to lack information about macroeconomic developments.
2. Recommendations for the analysis of data limitations make the effort to analyze the business strategy by using traditional research methods to be difficult.
The basic strategy adopted in order to improve data and information services include:
1) One of the doors of data; One of data meant that the Department of Agriculture just published a range of numbers for variables, indicators and time. A door that is data and agricultural information has been agreed by the echelon I units concerned before published outside through the Center for Agricultural Data and Information. Policy of the data and carried out by one door while the concept of centralizing the collection, processing, and presentation of data implemented in a distributed system by implementing an integrated information network.
2) Centralized concept; in order to avoid duplication and do not handle statistical development activities and information systems, by dividing out all activities required in accordance with the functional tasks of each unit of data and statistics in the Department of Agriculture. By applying this strategy, expected to be achieved effectiveness and efficiency of use of available resources.
3) internal consolidation by building infrastructure that support the execution of work, building a culture of work and service to all levels in the organization;
4) On the external side to coordinate with partners to establish cooperation in agriculture statistic and information systems with the goal of mutual support, and complete support.
Measures 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.
The steps in evaluating the quality of accounting 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) Identify potential problems
f) Make adjustments for accounting distortions
Accounting analysis of the effect of accounting between countries and the difficulty in obtaining the required information.
Analysts need to evaluate policies and accounting estimates, and analyze the nature and scope of a company's accounting flexibility. Effect on the measurement of quality of accounting, and auditing are very dramatic.
- depreciation adjustment
Depreciation will affect profits, it is necessary to consider the age of the functions that must be decided asset management.
- LIFO to FIFO inventory adjustment
Inventories should be converted into the FIFO method
c. reserve
Reserves are the company's ability to pay or cover expenses for removing the load.
d. Reformulation of Financial Statements
Difficulty of Obtaining Information International Accounting
The fourth stage of the business analysis (business analysis, accounting, finance, and prospective) is influenced by following factors:
(1) access to information
(2) timeliness of information
(3) the barriers of language and terminology
(4) the issue of foreign currency
(5) differences in the type and format of financial statements.
- Access to Information
Information about thousands of companies from around the world have been available in a straightforward in recent years. Sources of information in countless numbers up through the World Wide Web. Companies around the world today have Web sites and annual reports are available free of charge from various other sources and Interact.
Another source of valuable information are (1) government publications, (2) economic research organization, (3) international organizations such as the United Nations, (4) organization of accounting, auditing, and securities markets.
- Information Timeliness
Timeliness of financial statements, annual reports, reports to the regulator, and press releases relating to accounting reports differ in each country.
Differences in the timeliness of accounting information adds to the burden of the read the financial statements of foreign companies. The burden is greater for firm who have an environment that constantly changes. Assessment conducted in order to be meaningful, it needs constant adjustment of the amount that was reported, by means of conventional or unconventional.
- Consideration of Foreign Currencies
Accounts denominated in foreign currency to make the analysts are faced with two kinds of problems, namely:
1. Related to the ease of the reader
2. Regarding the information content.
Most companies around the world establish financial accounts denominated in the currency of their national domicile. For a reader who is familiar with the U.S. dollar, the analysis of the accounts are expressed in euro may lead to confusion. Common answer to that is to translate the balances in foreign currency into domestic currency.
If the report has been translated makes it easy for the reader to see the accounts in foreign currency in a currency that is commonly known, it may present a true picture is distorted. In particular, changes in foreign exchange rates and accounting procedures at the same time often results in an equivalent value in domestic currency as opposed to the underlying events.
Mechanisms to resolve differences in accounting principles between countries.
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.
Difficulties and weaknesses in international financial statement 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.
Using the www for information research firm.
a. The majority of companies have their own Web site and the majority use their homepage to inform the financial statements, especially financial information, namely the principal balance sheets and profit and loss. Not much, less than 40% of companies that provide additional financial information (notes to financial statements, auditors opinions and analysis of management).
b. The majority of companies only provide information or partial duplication of hard copy reports of historical information which is converted in the form of hypertext or pdf format.
c. Not many companies that really take advantage of Internet features optimally. This is evident, less than 10% of the company that delivered the information about the stock movement. In addition, although the majority of the home page displays the press release, but less than 35% is to update the information displayed.
d. The majority of companies have used technology is quite advanced. This is evidenced by the speed of displaying the information (94%), the use of JAVA applications to enhance the appearance, the use of hyperlinks and external links in home page. In addition, the majority view (interface) of the sample firms are well structured.
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