Practical analysis for investment professionals

Financial Statement Analysis


Counting the Cost of Capital and Seeding Network-Based Accounting

Cost of capital is a tenuous concept. Charlie Munger amusingly calls it a “perfectly amazing mental malfunction.”

James H. Freis, Jr., CFA: The Rise and Fall of Wirecard

A key lesson from the "Enron of Germany": If you see something, say something.

Refreshing Revenue, the Cash Conversion Cycle, and Free Cash Flow

GAAP sometimes misrepresents business reality. We can use that fact to generate some alpha.

Fraud and Deception Detection: Five Language Fingerprints

Dishonest companies tend to leave five textual fingerprints in their communications that differ from those of more truthful firms.

How Alpha Hides in GAAP Accounting: Return on Equity

You can find significant alpha in the mechanics that drive GAAP accounting.

Fraud and Deception Detection: Text-Based Analysis

Technology can give investment pros a huge advantage in evaluating the truthfulness of company communications.

The End of Accounting? Sustaining Financial Reporting

The explanatory power of the financial information reported to investors for market valuation has plummeted in recent decades.

Don’t Overlook Accounting Comparability

Low accounting comparability can be costly for both firms and managers.

The NMC Health Debacle: Four Red Flags?

Could the predictive models have anticipated NMC’s earnings manipulation and bankruptcy risk?

Accounting Matters: Standard Setters Weigh Goodwill Changes

The complexities of accounting for intangible assets and goodwill are not conducive to a quick fix.