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Problems in summary as the use of ifrs becomes more

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Unformatted text preview: tatement Analysis – Problems and Solutions Differences in accounting principles Some investors attempt to reframe foreign financial Some statements to a more familiar GAAP. statements Another approach is to use a stripped down measure of Another earnings that excludes items most affected by diversity. diversity Some firms alleviate some of financial statement users ’ problems in their convenience translation. problems In summary, as the use of IFRS becomes more In widespread, many of these problems will abate. widespread, Foreign Financial Statement Analysis – Problems Foreign Financial Statement Analysis – Problems and Solutions Business environment differences Differences in culture and economic environments have an impact on the relevance of ratios. A study of companies in Japan, Korea, and the U.S. found significant differences due to business environment. For example, Japanese and Korean companies borrow much more on a short­term basis than U.S. companies, leading to lower cu...
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