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Financial Statement Analysis and Security Valuation Paperback – 1 Jun 2007

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Product details

  • Paperback
  • Publisher: McGraw-Hill Higher Education; 3 edition (1 Jun. 2007)
  • Language: English
  • ISBN-10: 0071254323
  • ISBN-13: 978-0071254328
  • Product Dimensions: 20.3 x 2.4 x 25.4 cm
  • Average Customer Review: 5.0 out of 5 stars  See all reviews (1 customer review)
  • Amazon Bestsellers Rank: 886,870 in Books (See Top 100 in Books)
  • See Complete Table of Contents

Product Description

From the Publisher

Focus on the output of financial statements, not the input (user focus vs. preparer). A number of financial statement analysis texts have chapters that explain how the accounting is done, many with material similar to that in intermediate accounting texts. This text asks what the financial statements tell you, not how they are prepared. However, the user of financial statements has to have some knowledge of accounting. Part 4 of the text covers many accounting details, but in a way that examines accounting methods from the point of view of how they help or hinder analysis. This way, students develop a critical perspective on the accounting to supplement the descriptive one acquired in accounting courses.
The text brings finance and accounting concepts together. In a typical program, students get their accounting "here" and their finance "there." Finance professors often do not cover how accrual accounting helps in valuation and settle for cash-flow analysis. Accounting professors teach accrual accounting and financial statement (ratio) analysis, but sometimes don't make the link to investment questions. This book links accounting and finance so that the financial statement analysis is guided by concepts of finance and central issues in finance equity and debt valuation within an accounting framework.
Penman takes a disciplinary approach to the subject. That is, it builds the analysis from "first principles" in a systematic way so students can see where things are coming from. The author believes that in the area of investments, where there are many suspect techniques, the student needs to have the confidence that the analysis is rigorous and sound. An alternative approach is to teach by metaphor through cases without a formal framework. Cases are included as applications of the analysis, but the book is, in the real sense, a textbook.
The text takes an activist approach to investing (and using financial statements for investing.) It does not assume that the market is efficient. It encourages students to think that a stock might be mispriced, so it gives students a motivation to be active about doing analysis. This in no way prejudges the market efficiency issue. It is a pedagogical device and the student might well discover, through analysis, that a particular stock's price is efficient.
This text shows how to move from concepts to practice. It is "product" oriented in that it aims to show how to build a concrete valuation technology based on the financial statements. Most of the analysis can be built into a spreadsheet program.
This text is "state of the art." It reflects recent developments in research and practice, particularly the use of residual-income (economic profit) techniques. Author Stephen Penman is among the top financial accounting academics in the world. He is extremely well known for his research, which is the framework of this textbook.
Penman incorporates cases, problems, and exercises from real world companies including Wal-Mart and Hewlett-Packard. The real world emphasis is a major strength of the text.The web site will have links to data sources and the financial press, including Standard & Poors (COMPUSTAT) data and Business Week sites, as well as relevant public sites. It will also include additional material and examples and a number of devices to help instructors deliver the course efficiently. --This text refers to an out of print or unavailable edition of this title.

About the Author

Stephen Penman is the L.H. Penney Professor of Accounting at the University of California at Berkeley. He received his Ph.D. from the University of Chicago in 1978. He has published extensively in the Journal of Accounting and Economics, the Journal of Accounting Research, and the Contemporary Accounting Research journal. he currently on the editorial board of the Review of Accounting Studies. He is known around the world for his reserch in Financial Accounting.

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Most Helpful Customer Reviews

6 of 7 people found the following review helpful By Sulaiman Alhasawi on 12 Mar. 2010
Format: Paperback Verified Purchase
I'm studying MSc in Accounting and Finance at Bangor University- North Wales. I bought this book to help me digest my module "Financial Analysis". I found the book very informing and practical. I highly recommend it to students or any one involved in understanding company's balance sheets fundamentally.
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Most Helpful Customer Reviews on (beta) 22 reviews
49 of 58 people found the following review helpful
Incomplete 13 May 2007
By MD, MBA - Published on
Format: Hardcover
The book itself is great. I bought it with the idea that I would read it and teach myself the material since completing an MBA two years ago. I was denied access to solutions for the exercises and other resources reserved for instructors and students in degree programs. All information provided to instructors was denied to me by the publisher. For the money spent on this volume, all of the educational resources should be made available either through instructors in formalized degree programs or by some other means to people like myself not in degree programs. Otherwise, this text should not be made available to the general public on Amazon. That stated, the book itself is superb...if you want to read it like a novel.
27 of 34 people found the following review helpful
Good Text, Horrible Service 29 July 2007
By Andre Navas - Published on
Format: Hardcover
This is such an excellent text. McGraw Hill has to provide access to the solutions so that individual investors who are trying to teach themselves can learn the material. This is ludicrous. It stinks.
6 of 6 people found the following review helpful
A fine book 7 April 2014
By Heiko Ziehms - Published on
Format: Hardcover
I have read most editions over the last ten years and continue to be very impressed with this book. I like, in particular, the clarity and thoroughness of Professor Penman's writing. He gets to the bottom of complex accounting issues, never cuts corners, and addresses how to ensure a conceptually 'clean' interaction with the valuation. Professor Penman is a first rate accountant who explains well and who is concerned with the relevance of financial statements to their users. His discussion of pensions is a case in point. Where many accounting texts are detail-oriented, he is principles-driven. At the intersection of accounting and valuation, I know of nothing better.
6 of 6 people found the following review helpful
Excellent book 28 April 2008
By A. Jones - Published on
Format: Hardcover
I think this is a terrific book for learning the intricacies of financial statements. It takes you through a rigorous dissection of each of the primary statements - balance sheet, income statement, cash flow, statement of shareholder's equity - and then demonstrates how each interacts with the other. A very fascinating approach.

Many earlier reviewers rated the book poorly because they could not get access to the review question answers for self-study. I contacted Professor Penman myself and he sent them to me. Very nice guy and reasonable.
5 of 5 people found the following review helpful
Detailed text, interesting sidebars, sometimes dense. 4 Feb. 2013
By BigRed - Published on
Format: Hardcover
The title of this review pretty much sums it up. It is very detailed, and the sidebars and applications were probably my favorite parts of it. It can however be difficult to follow, and it seems that Penman has a chip on his shoulder about several issues and tries to go to deep in some areas to cover this. I may be reading too much in between the lines here, but it's how it came across to me. Overall a decent text.
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