경영
The Impact of IFRS on Financial Analysis Methods
2009-12-30LEE, In-Hyuk
목차
요약
Understanding IFRS is critical for protecting asset quality and
financial soundness
IFRS will be mandatory for publicly listed companies beginning in 2011
The globalization of the financial markets has highlighted the need for aligned accounting standards. As a result, all publicly listed Korean companies will be required to use IFRS for their financial statements beginning in 2011.
IFRS is now used in over 110 countries and is becoming the global standard.
There are 4 key differences between IFRS and current standards: ① focus on consolidated disclosures, ② expanded fair value accounting for assets and liabilities ③ incorporation of economic realities in accounting treatments and ④ principle-based standards.
As a result, unprepared users of financial statements may face difficulties in analyzing information using the new standards. Understanding IFRS is critical since financial statement analysis is a key part of banks' credit decisioning and scoring processes, IB and funds' stock price valuations, and banks' BIS ratio calculations.
Key features of IFRS and watch points in conducting financial analysis
If consolidated financial statements are provided, additional unconsolidated statements will not be disclosed. As a result, financial trends will be difficult to analyze since creating time-series by aligning old and new statements will be problematic.
Income statements will gradually be simplified due to changes in format and disclosed items. Also, some financial ratios will need to be adjusted since expenses will not be categorized into cost of sales, SG&A, and non-operating expenses.
Expanded use of fair value accounting will result in valuation gains on land and bulidings, which will result in significant one-off increases in net profit and equity.
Convertible preferred stock will be reclassified as liabilities to reflect economic realities, which will raise debt ratios, and dividends will be recognized as interest expense, which will lower net profit.
A thorough understanding of IFRS is necessary for accurate financial analysis
In order to avoid asset quality impairment under the new standards, pre-emptive analysis of the impact of IFRS on financial statements and financial analysis is necessary.
Financial analysis is a key part of banks' credit screening and scoring process, as well as stock price valuations for IB and funds. Since IFRS affects Basel II risk-weighted assets, it will have an impact on banks' BIS ratios as well.
In addition, it is important for financial groups to have their own consolidated management system and establish a process for accounting and disclosures.
financial soundness
IFRS will be mandatory for publicly listed companies beginning in 2011
The globalization of the financial markets has highlighted the need for aligned accounting standards. As a result, all publicly listed Korean companies will be required to use IFRS for their financial statements beginning in 2011.
IFRS is now used in over 110 countries and is becoming the global standard.
There are 4 key differences between IFRS and current standards: ① focus on consolidated disclosures, ② expanded fair value accounting for assets and liabilities ③ incorporation of economic realities in accounting treatments and ④ principle-based standards.
As a result, unprepared users of financial statements may face difficulties in analyzing information using the new standards. Understanding IFRS is critical since financial statement analysis is a key part of banks' credit decisioning and scoring processes, IB and funds' stock price valuations, and banks' BIS ratio calculations.
Key features of IFRS and watch points in conducting financial analysis
If consolidated financial statements are provided, additional unconsolidated statements will not be disclosed. As a result, financial trends will be difficult to analyze since creating time-series by aligning old and new statements will be problematic.
Income statements will gradually be simplified due to changes in format and disclosed items. Also, some financial ratios will need to be adjusted since expenses will not be categorized into cost of sales, SG&A, and non-operating expenses.
Expanded use of fair value accounting will result in valuation gains on land and bulidings, which will result in significant one-off increases in net profit and equity.
Convertible preferred stock will be reclassified as liabilities to reflect economic realities, which will raise debt ratios, and dividends will be recognized as interest expense, which will lower net profit.
A thorough understanding of IFRS is necessary for accurate financial analysis
In order to avoid asset quality impairment under the new standards, pre-emptive analysis of the impact of IFRS on financial statements and financial analysis is necessary.
Financial analysis is a key part of banks' credit screening and scoring process, as well as stock price valuations for IB and funds. Since IFRS affects Basel II risk-weighted assets, it will have an impact on banks' BIS ratios as well.
In addition, it is important for financial groups to have their own consolidated management system and establish a process for accounting and disclosures.
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