INTERNATIONAL FINANCIAL ANALYSIS

INTERNATIONAL FINANCIAL ANALYSIS

1. Understanding the difficulties of international business starategi analysis and basic strategy for the collection of information

The purpose of financial analysis is to evaluate the performance of companies on the present and past, and to assess whether the performance can be maintained. Investors, equity research analysts, financial managers, bankers, and users of financial reports other has a greater need to read and analyze reports.

The need to use and to understand, foreign financial statements also increased due to merger and acquisition activities occurring internationally.

Analysis of International Business Strategy

Analysis and assessment of international finance is characterized by many contradictions. On one hand, how quickly the process of harmonization of accounting standards lead to a growing pretext comparability of financial information around the world.

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 of business strategy particularly difficult in some countries due to lack  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 analysis

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 industry and company operations, particularly in emerging market countries.
Effect Of Accounting Accounting Analysis of Inter-State

Financial analysis covers different areas of jurisdiction. For example, an analyst several times to study a firm outside the country of origin or to compare companies from two countries or more. A number of countries that have very large differences in accounting practices, disclosure quality, legal system and laws, the nature and scope of business risks, and how to run a business.

This difference means that a very effective analytical tool in the region to be less effective in other regions. The analysts also often face a great challenge to obtain credible information. In most emerging market countries, financial analysts often have high levels of confidence or of limited reliability.

Difficulty of Obtaining Information 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.

2. Explains accounting measures analysis

Step by Step Analysis of Accounting

Analysts need to evaluate and accounting estimates, and analyze the nature and flexibility  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-step in doing accounting quality of a company:

a. Identify the main accounting policies

b. Analysis of accounting flexibility

c. Evaluation of accounting strategy

d. Evaluation of the quality of disclosure

e. Potential problems

f. Make adjustments for accounting distortions.

Analysis of financial statements (financial statement analysis) is the application of analytical tools and techniques for general-purpose financial statements and related data to generate estimates and conclusions are useful in business analysis.

INTRODUCTION TO BUSINESS ANALYSIS

Analysis of financial statements is part of business analysis. Business analysis is an analysis of the prospects and risks for the interests of corporate business decisions.The objective is to help business decision-making by structuring the task analysis on the company's business environment, strategy, and the position and its financial performance.

TYPE - TYPE OF BUSINESS ANALYSIS

Analysis of the financial statements are an integral and essential part of business analysis. Business goals of the analysis is to improve business decision making by evaluating available information about the financial situation of the company, its management, plans and strategies, as well as the business environment. Business analysis is applied in many forms and is an important part of the decision of securities analysts, investment advisers, mutual fund managers (fund managers), investment bankers (investment banker), credit rating agencies (credit raters), corporate bankers (corporate bankers), and investors individual.

MAIN TYPES OF BUSINESS ANALYSIS

A. Credit Analysis

Creditors lend funds to a company and receive a promise of payment of principal and interest. Creditors lend funds in many forms and for various purposes. Trade creditors (operating creditor) to deliver the goods or services to a company and expect payment within a reasonable time, which is often based on industry norms.

2. Analysis of Equity

Equity investors (equity investors) to provide funds to companies in return for the risks and rewards of ownership. Equity investors is the largest provider of corporate funding. Equity financing, also called equity or capital stock, or offer a security guard for all major forms of funding over him. This means that equity investors are entitled to assets of the company distributed only after the claims of a major claimant have been met, including interest and preferred dividends.

COMPONENT ANALYSIS OF BUSINESS

Business Environment Analysis and Strategy

Analysis of business environment and the strategy is made up of industry analysis and strategy analysis. Industry analysis is usually the first step, given the prospects and industry structure largely determines the profitability of the company.

Analysis of the industry (industry analysis) is often done by using the framework proposed by Porter (1980, 1985) or analysis of the value chain (value chain analysis).

Analysis of strategy (strategy analysis) is an evaluation of the company's business decisions and build successful enterprises and business environment. Analisis excellence strategy requires knowledge of the strength of the economy and industry. This analysis also requires knowledge of the management strategy, business policy, production, logistics management, marketing, and managerial economics

Financial Analysis

Financial report is to analyze the use and the Position of the company's financial performance and to assess financial performance in the future.

The financial analysis consists of three major parts, namely:

A. Profitability Analysis

an evaluation of the company's investment. This analysis focuses on the company's resources and the level of profitability. And involves the identification and measurement of the impact of various drivers of profitability.

2. Risk Analysis

an evaluation of the company's ability to fulfill its commitment to the variation in earnings. Risk analysis is important for the analysis of equity, both to evaluate the reliability dabn durability performance of the company to estimate the cost of capital.

FINANCIAL REPORT - BUSINESS ANALYSIS

Following the company's financial disclosure statements to inform the company of four main activities:
A. Plan

The business plan helps managers to focus their efforts and identify opportunities and obstacles are expected. Dalamam view to assist the analysis of the business plan the company's prospects and nanri now, and is part of the business environment analysis and strategi.kita find information about the company's goals and tactics. Demand, performance management, competitive analysis, sales strategy, performance management, and this .Information projections can be in the financial statements (management discussion and analysis) and are also available media such as less formal statement of the press, industry publications, bulletins analysis , and financial news.

2. Funding

Is a method that companies use to get money to needs. There are two sources of funding, namely:

a. Equity investors (shareholders)

Investors provide funding in hopes of getting a return on their investment, after considering the return on and risk.

b. Creditors (lenders)

There are two types of creditors, namely

i. creditor's debt, which directly lend money. Typically funding takes place through loans or through the provision of securities or bonds. Creditors include banks, institutional lenders, financial institutions and non financial,

ii. operating creditors, who lend money to companies as part of its operations. Creditors include suppliers, employees, governments and others who lend money to companies

3. Understanding the effect of the accounting analysis of the accounting between countries and the difficulty in obtaining the required information.

Several approaches can be done as follows:

Some analysts present the foreign accounting resize according to a group of internationally recognized principles or according to other, more basic. Others develop a complete understanding of accounting practices in a particular group of countries and limited their analysis to firms located in the State- the country.

4. Recognize the mechanism to resolve differences in accounting principles between countries

Several approaches can be done as follows:

Some analysts present the re-size foreign internationally recognized principles or according to other, more basic. Others develop a complete understanding of accounting practices in a group of specific countries and limited their analysis to companies located in the State- the country.

5. Understand the difficulties and weaknesses in international financial statement analysis

a. Access to information

Information about 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 sources. Timeliness of information

Timeliness of financial statements, annual reports, reports to regulators vary in each Language barriers and terminology currency issue. Differences in the type and format of financial statements.

6. Understanding how to use the www for 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.

2.1 Internet Financial and Sustainability Reporting

Since 1995, there have been developments of empirical research related to Internet Financial Reporting (IFR), which reflects the development of forms of corporate disclosure. Some studies examine the factors that influence disclosure policy in the company's website, such as research conducted by Pirchegger and Wagenhofer (1999) and Saso and Luciana (2008a). Some studies examine the nature and expansion of financial reporting on the company website as an instrument that relate to the stakeholder. Cheng, Lawrence and Coy (2000) develop an index to measure the quality of disclosure IFR at 40 large companies in New Zaeland. The results Cheng, Lawrence and Coy (2000) showed that 32 (80%) companies have a website and 70% of the samples presented financial information on a company website.

2.2 Corporate Social Responsibility

Understanding and awareness of business entities to maintain good relations with all stakeholders in an effort to minimizing negative impacts and maximizing positive impacts of the operational activities of the company towards the development  this is now understood as a CSR (Corporate Social Responsibility. Strengthening the sustainable development paradigm and corporate social responsibility initiatives CSR reporting or making social and environmental performance are considered as important as the reporting of economic performance. biggest problem is that the quality of non-financial reports are not yet as good as the quality of financial reporting.

• the aspects that are required by all stakeholders, the higher also the reputation of the company. Of course, if the reported performance is good and valid. Therefore, companies should first improve its performance seriously. Validity is also very important, because stakeholders will never forgive a company that does public deception.

• Second, to serve the demands of stakeholders. Stakeholders are parties who are affected by and could affect the company in achieving its goals. Of course, those who influenced his life by the company are entitled to know the aspects that come into contact with their lives. Those who could affect the company is very necessary to get the right information, so that their influence can be directed to the appropriate destination.