Document Type
Article
Publication Date
4-2010
Abstract
The article discusses three accounting changes issued by the Financial Accounting Standards Board (FSAB). The Statement of Financial Accounting Standards (SFAS) No. 158 "Employers' Accounting for Defined Benefit Pension and Other Retirement Plans" and the SFAS No. 160 "Noncontrolling Interests in Consolidated Financial Statements" are mentioned. Financial Interpretation 48 "Accounting for Uncertainty in Income Taxes, an Interpretation of FSAB Statement No. 109" is mentioned.
The takeaway? Financial analysts, investors, and creditors need to carefully interpret ratios and measures, including debt to equity, liabilities to equity, and return on equity. Financial ratios used in loan covenants should be clearly designed and defined, and, in some cases, equity may be more meaningfully defined as adjusted for certain changes in other comprehensive income.
Recommended Citation
Lyons, B., Paliwal, R., & Pannese, D. (2010). Interpreting financial results. Strategic Finance, 91(10), 49-53.
