Synopsis
Praise for Financial Statement Analysis FOURTH EDITION
"I love this book. It helps to develop the questioning mind the mind of a financial detective. It teaches the art of skepticism and critical thinking. Readers go beyond definition and calculation and learn interpretation." Philip L. Cooley, PhD, Prassel Distinguished Professor of Business, Trinity University
"Over my decades of involvement with high-yield bonds, Marty Fridson has been the leading speaker of truth. As he so accurately states in Financial Statement Analysis, the credit investor is required to engage in a game of cat-and-mouse with company management's intent on minimizing their cost of capital by putting a positive gloss on their financial statements. The Fourth Edition of Marty's terrific book is the bible on how to detect and deal with these efforts." Howard Marks, Chairman, Oaktree Capital Management
"Financial Statement Analysis is a unique text; it combines great academic work with numerous real-life examples to form a highly useful reference for equity investors, debt holders, and investors who straddle both asset classes. Whether you are an investor, an investment advisor, or a teacher, Financial Statement Analysis will prove very valuable." Margaret M. Cannella, former head of Global Credit Research, J.P. Morgan and Adjunct Professor, Columbia Business School
"Marty has seen it all! He has had a front-row seat to see the birth, death, and rebirth of the high-yield bond market . . . several times over! In the Fourth Edition of Financial Statement Analysis, Marty clearly demonstrates that despite the enactment of Sarbanes-Oxley in 2002, and other attempts to curtail abuse of the system, one needs a critical analytical eye to be certain that management is not trying to obfuscate the truth. The case studies provide excellent and timely examples of some of the techniques that companies have used to mislead investors." Edward Z. Emmer, former global head of Corporate and Government Ratings and Equity Research, Standard & Poor's
"Those who read financial statements without understanding the strategic context in which they are written will land on the losing end of the gripping episodes with which bond-market legend Marty Fridson illustrates in the Fourth Edition of his classic reference, Financial Statement Analysis. And all of us who depend on the markets sending capital to its best use should hope that investors read this book first." David Musto, Professor of Finance, the Wharton School of the University of Pennsylvania
"This book rightly urges resolute skepticism when inspecting financial statements. Its great value, though, is in the plain-spoken stripping down of real-world and illustrative examples that show how to see past the numbers to the practicalities and incentives behind them and so help analysts and journalists alike ask the right questions." Richard Beales, Assistant Editor, Reuters Breakingviews
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From the Inside Flap
Financial Statement Analysis A Practitioner’s Guide Second Edition "Fridson uses common sense to poke at some of Wall Street’s big selling myths. A handy guide for number crunchers." —Jack Willoughby Staff Writer Investment Dealers Digest "Marty Fridson’s book is a must for every serious financial analyst and an entertaining read for all others. He has taken a dry subject and given it aspects of a mystery novel through his abundant use of real examples which bring analytical issues to life." —Jack L. Rivkin Vice Chairman Director of Global Research Smith Barney Just about anybody who’s taken a good look at a quarterly or annual report has sensed that corporate financial statements are designed to conceal more than they actually reveal. But how exactly do corporations manipulate their public financial statements to make themselves appear as attractive as possible to investors—more attractive than they really may be? What important information are the accountants leaving out? And, more importantly, how can you make the numbers tell you what you really need to know? Now Financial Statement Analysis, Second Edition shows you how. Martin Fridson takes a hard look at the information that appears on financial statements, including the balance sheet, income statement, and statement of cash flows. With the help of many real-life illustrations, he explains the crucial information that corporations routinely leave out of their financial reports and the stratagems managers use to control the perceptions of investors and creditors. Thoroughly updated and expanded to reflect today’s financial realities, Financial Statement Analysis, Second Edition arms investors, money managers, financial analysts, and bankers with:
- Detailed guidelines on how to read and interpret balance sheets; income statements, and other key financial documents
- Dozens of timely true stories that demonstrate the kinds of complications that can arise when analysts apply textbook knowledge to real-world number juggling
- A gold mine of insider tips from a seasoned professional for maximizing the accuracy of forecasts
- The kind of healthy skepticism you need to reach sound conclusions through a structured approach to credit and equity evaluation
- New and expanded coverage of revenue recognition, country-to-country variations in accounting methods, new techniques for analyzing credit risk, the auditor’s role, and more
From the Back Cover
FINANCIAL STATEMENT ANALYSIS
What do most textbooks neglect to tell you about financial reports? Just about everybody who has taken a good look at an annual report has sensed that corporate financial statements are designed to conceal more than reveal. But how, exactly, do corporations manipulate their financial statements to control the perceptions of investors and creditors? What vital information are the accountants leaving out? How can you make the numbers tell you what you really need to know?
Martin Fridson shows students how with a practical, lively, and rigorous guide to the financial statement. Incorporating real-life situations, he demonstrates the kinds of complications that arise when analysts apply textbook knowledge to real-world number juggling on balance sheets, income statements, and other financial data. New and expanded for university students, Financial Statement Analysis, Second Edition provides readers with the insight and know-how to understand and evaluate the facts behind the fiction of most corporate financial statements.
"Martin Fridson provides a broad and very practical perspective on the art of financial statement analysis. By exploring numerous examples from recent real-world situations, the book enlivens and sharpens the issues involved in interpreting financial reports. It is a solid and interesting introduction to financial statements and their use in a variety of important analytical settings." -- Jay O. Light Professor of Business Administration, Harvard University
"This book is comprehensive, analytical, and rigorous, yet very practical and applications-oriented. Financial Statement Analysis, Second Edition can either be read from cover to cover, or used as a reference tool. The book provides a wealth of information in an extremely well written and well organized manner." -- Frank J. Jones, PhD, Executive Vice President and Chief Investment Officer, The Guardian Life Insurance Company of America
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