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Some Financial Analysis Tools

Bob JensenEmeritus Professor of AccountingTrinity University in San Antonio

190 Sunset Hill RoadSugar Hill, NH 03586

603-823-8482rjensen@trinity.edu

http://www.trinity.edu/rjensen/

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Accounting Theory

Overview ---

http://www.trinity.edu/rjensen/Theory01.htm Local Link --- ..\..\theory01.htm

Fraud ---http://www.trinity.edu/rjensen/fraud.htm Local Link --- ..\..\fraud001.htm

Electronic Commercehttp://www.trinity.edu/rjensen/ecommerce.htm

Local Link --- ..\..\ecommerce\000start.htm

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Data

218

156

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Tagged Data

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Weight in PoundsUnited Kingdom Weights and Measures Act 1963

Robert E. Jensen190 Sunset Hill RoadSugar Hill, NH 03586September 14, 2007

1:53 p.m.

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Tagged Data

156

Amortization of Basis Adjustment in USDDecember 31, 200X1

Fair Value Interest Rate SwapABC CompanyParagraph 117

Under FAS 133 StandardsNot the Same Under IAS 39 Standards

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XBRL

Think of a set of financial statements as being a library

Think of each piece of data in a set of financial statements as a book in the library.

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XBRL

Think of a librarian “marking up” the back binding of a book with a classification code such as a Dewey Decimal code or a Library of Congress Code.

The marked up book code allows librarians to place the book among topic-related books in the stacks.

The marked up book code allows patrons to easily find both a given book and related books on a topic.

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XBRL

Think of the SEC “marking up” each piece of data in a 10-K report with a classification tag based on a set of accounting standards such as US GAAP or International GAAP

The SEC’s tags are in XML extensible markup code that that complies with a business reporting standard called eXtensible Business Reporting Language (XBRL_

The XBRL tags allow analysts to slice and dice a given report or multiple 10-K reports of multiple companies.

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XBRL

Technology Timeline --- http://www.trinity.edu/rjensen/XBRLandOLAP.htm Local Link --- ..\..\XBRLandOLAP.htm

Bob Jensen’s Video Tutorials --- http://www.cs.trinity.edu/~rjensen/video/Tutorials/ Local Link 2001 --- ..\Video\Tutorials\XBRLdemos.wmvLocal Link 2005 --- ..\Video\Tutorials\XBRLdemos2005.wmv

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XBRL

The AICPA and many large companies and Wall Street first carried the ball by developing a set of standards for XBRL tagging so that within a designated GAAP such as US GAAP, tagged data would be comparable between different companies.http://www.xbrl.org/Home/

The SEC took the lead in the tremendously costly effort of encouraging/requiring companies to mark up SEC registration reports with XBRL tags. There are various software packages available for marking up XBRL tags. One of the popular software alternatives is called Dragon Tag from Rivet Software --- http://www.rivetsoftware.com/

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Dragon View Released as Open Source in 2007 The FREE XBRL Viewer!

Dragon View's release into open source enables users and developers to benefit from Dragon View's extensive functional and tested code base.  Dragon View played an important role in Rivet being granted a contract from the U.S. Securities and Exchange Commission (SEC) to create an XBRL viewer for the SEC Web site.

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Jensen’s XBRL Tutorials --- http://www.cs.trinity.edu/~rjensen/video/Tutorials/

2001 --- Local Link ..\Video\Tutorials\XBRLdemos.wmv

2005 --- Local Link ..\Video\Tutorials\XBRLdemos2005.wmv

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Pivot Table Tutorial

Web Link to Excel Workbook --- http://www.cs.trinity.edu/~rjensen/EdTech/MicrosoftPivots/PivotingTutorial/

Local Link to Excel Workbook --- ..\MicrosoftPivots\PivotingTutorial\PivotTableTutorial.xls

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Financial Analysis Softwarehas Evolved over 25 Years

MicrosoftPivotTable Analysis --- http://www.cs.trinity.edu/~rjensen/EdTech/MicrosoftPivots/http://www.microsoft.com/msft/financial/default.mspx

Local Links --- ..\Video\MicrosoftPivots\ExcelPivotMicrosoft.wmv..\MicrosoftPivots\MicrosoftInvestorRelationPivots\Year2001\microsoftHistory2001.xls..\MicrosoftPivots\MicrosoftInvestorRelationPivots\Year2001\microsoftWhatIf2001.xls

S&P Core EarningsLocal Links --- SPcoreEarnings\core powerpoint 110702.pptSPcoreEarnings\CoreEarningsOilGas.xls

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Financial Analysis Softwarehas Evolved over 25 Years

fisCal Videohttp://fiscalsoftware.net/?gclid=CPS79faDqI4CFSasGgodIiUhaA

Local Link --- ..\Video\FinancialAnalysis\fisCal.wmv

S&P Core Earnings --- http://www.cs.trinity.edu/~rjensen/EdTech/PowerPoint/SPcoreEarnings/

Local Links --- SPcoreEarnings\core powerpoint 110702.pptSPcoreEarnings\CoreEarningsOilGas.xls

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WebLedgers

Webledger Alternatives --- http://www.trinity.edu/rjensen/webledger.htm Local Link --- ..\..\webledger.htm

NetSuite-Controller Video

Local Link --- ..\Video\FinancialAnalysis\NetSuite-Controller.wmv

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WebLedgers

Great for small and some medium-sized companies

Eliminate the need for buying, updating, and maintaining accounting and related software (payrolls, billing, accounts receivable, inventory ordering, and financial statement analysis and preparation).

Add on options for Customer Relations Management (CRM), Executive Summaries, and Fiancial Statement Analysis.

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WebLedgers

Eliminates the cost of expensive IT staff with typically high turnover and security risks.

Over a million times less likely to have a systems crash.

Data entry from anywhere in the world

Integrates easily with other company databases in a ERP system

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WebLedgers

NetLedger Student Team Project --- http://www.cs.trinity.edu/~rjensen/EdTech/netledger/NetLedger.pdf

Local Link --- ..\netledger\NetLedger.doc

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Two Types of Financial Analysis

Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security.

Technical analysis maintains that all information is reflected already in the stock price, so fundamental analysis is a waste of time. Trends 'are your friend' and sentiment changes predate and predict trend changes. Investors' emotional responses to price movements lead to recognizable price chart patterns. Technical analysis does not care what the 'value' of a stock is. Their price predictions are only extrapolations from historical price patterns.

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Jensen’s XBRL Tutorials

2006 --- ..\Video\Tutorials\XBRLdemos.wmv

2005 --- ..\Video\Tutorials\XBRLdemos2005.wmv

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The End