Tory notes and the managements discussion and

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tory notes and the management's discussion and analysis of financial results along with other important disclosures and for periods in addition to the past year.
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Module 1 I Framework for Analysis and Valuation 1-8 Form lO-Q: the quarterly report, which provides an interim view of a company's financial position and performance; includes summary versions of the four financial statements and limited additional disclosures. Additional common SEC financial filings are: Form lO-K/Aor lO-Q/A: the "A" refers to an amended previously filed Form lO-K or lO-Q, respectively, usually due to an accounting change or error correction. Form 20-F: submitted by all "foreign private issuers" to reconcile accounting statements to U.S. GAAP standards. These forms are available electronically from the SEC Website (see Appendix lA). The minimum, regulated level of information is not the standard. Both the quantity and quality of information differ across companies and over time. We need only look at several annual reports to see consid- erable variance in the amount and type of accounting information supplied. For example, differ- ences abound on disclosures for segment operations, product performance reports, and financing activities. Further, some stakeholders possess ample bargaining power to obtain accounting infor- mation for themselves. These typically include private lenders and major suppliers and customers. The information that companies make public is a rich source from which we perform our financial statement analysis. Our understanding of that information provides the basis for evalu- ating how the company has chosen to operate in its business environment, where the company i currently, and what it plans for the future. This analysis then shapes our expectations of the ompany's future (our forecasts). Still, as we use the information provided by the company, we must consider the benefits and costs that influence the company's disclosures. Benefits of Disclosure The benefits of supplying accounting information extend to a company's capital, labor, input, and output markets. Companies must compete in these markets. For example, capital markets provide debt and equity financing; the better a company's prospects, the lower is its cost of capital (as reflected in lower interest rates or higher stock prices). The same holds for a company's recruit- ing efforts in labor markets and its ability to establish superior supplier-customer relations in the input and output markets. A company's performance in these markets depends on success with its business activities and the market's awareness of that success. Companies reap the benefits of disclosure with good news about their products, processes, management, and so forth. That is, there are real economic incentives for companies to disclose reliable (audited) accounting information enabling them to better compete in capital, labor, input, and output markets.
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