The aim of this textbook is to provide essential information for the interpretation of financial accounts of the company.
The book will give answers to following general questions: why and how companies should prepare financial statements? Who are the users of financial statements?
Which information can be obtained from financial statements?
In doing so, the book describes techniques for asset and liability evaluation and financial analysis tools which will be useful for understanding the performance and financial position of the company.
The recipient of the book are both the preparers and the readers of the financial statements (shareholders - the owners of the business, potential shareholders, managers and employees; but also creditors and potential creditors, suppliers – especially if they supply goods on credit, employees and their trade unions, as well as the government – for tax purposes).
The author hopes that this book provides financial accounting students in business schools with a reliable reference tool for understanding the accounts and financial performance of a company.

Introduction

PART I
GENERAL PURPOSE FINANCIAL STATEMENTS

Chapter 1 Introduction to financial accounting
1. Nature and Objectives of Financial Accounting
2. The stewardship objective
3. The users of the financial statements
4. Limitations of financial statements
5. Corporate Social Responsibility (CSR) and accountability
6. The regulatory framework for financial accounting

Chapter 2 Content and framework of financial statements
1. Information that is included in the financial statements
1.1. Presentation of Financial Statements
1.2. Statement of Financial Position
1.3. Statement of Comprehensive Income
1.4. Statement of Changes in Equity
1.5. Statement of Cash Flows
1.6. Notes
1.7. Management Commentary
2. IAS/IFRS in UE
3. IAS/IFRS around the world

Chapter 3 Accounting Principles and Concepts
1. The content and purposes of a conceptual framework of accounting
2. The nature of accounting principles
2.1. The matching principle
2.2. The entity concept and time period
2.3. The materiality concept
2.4. Money measurement and double entry
2.5. The prudence concept
2.6. Substance over form
2.7. Consistency
3. Recognition and measurement
3.1. Historical cost
3.2. Current Cost, Realizable value and Present Value
4. The qualitative characteristics of financial information
4.1. Understandability
4.2. Relevance
4.3. Reliability
4.4. Comparability
4.5. Conflict between the qualitative characteristics
Appendix: accrual accounting

Chapter 4 Fixed assets, Depreciation and Intangibles
1. The nature of property, plant and equipment
1.1. Recognition of the Fixed Asset
1.2. Initial Measurement of the Asset
1.3. Measurement subsequent to initial recognition
2. Depreciation
3. Leasing
4. Investment Properties
5. Impairment
6. Intangible Assets
6.1. Criteria for recognition and measurement of intangible assets

Chapter 5 Current assets: Inventory and Receivables
1. Categories of inventories
1.1. Recognition of inventory
1.2. The valuation of inventory
2. Construction contracts
3. Receivables

Chapter 6 Liabilities and Provisions
1. Liabilities
2. Provisions, Contingent Liabilities and Contingent Assets
2.1. Practical problems and Big Bath’ Accounting

Chapter 7 Financial Instruments
1. Financial Instruments

Chapter 8 Accounting Policies, Earning Management and Fraud
1. Accounting policies
1.1. Flexibility in the choice of accounting policies
1.2. Earning management
1.3. Creative Accounting and Fraud

PART II
FINANCIAL STATEMENT ANALYSIS

Chapter 9 Financial Statement Analysis
1. Financial analysis: an introduction
1.1. Assessment of business performance
1.2. The company’s check up for an insolvency prediction in companies

Chapter 10 Analysis of the Financial Structure
1. Analysis of the financial structure
1.1. Financial structure: composition of the investment
1.2. Financial structure: composition of the acquired capital
2. Analysis of the financial leverage

Chapter 11 Analysis of the financial situation
1. Analysis of the financial situation
1.1. Net working capital and liquidity margin
1.2. Current ratio and quick ratio
2. Financial cycles
2.1. Trade receivables
2.2. Inventories
2.3. Commercial payables
2.4. Total asset turnover ratio

Chapter 12 Economic and Profitability Analysis
1. Management analysis
1.1. Analysis of the nature-based Income Statement
1.2. Analysis of the destination-based Income Statement
2. Profitability analysis

Chapter 13 Analysis by flows and Cash Flow Statements
1. Introduction: funds and flows
1.1. The sources
1.2. The investments
2. The cash flow statement

Chapter 14 Case study
1. Company 1
2. Company 2
3. Company 3
4. Company 4
5. Company 5

References

Maurizio Cisi is currently a Professor of Business Management at the University of Torino (Italy). He has an academic background in Financial and Managerial accounting as well as in non-financial reporting (Triple bottom line and Sustainability reporting) combined with a practical work experience as consultant ad trainer. He is certified chartered accountant and independent auditor. He is responsible for the Business and Management Program of the University of Torino.
His main research area has been so far the reporting standards and its effects on companies performance analysis, intended both from the pure financial perspective (Ias/Ifrs, also for Smes) and Non-financial reporting standards (GRI, IRRC). His academic teaching experiences, started in 1997, relies on several courses at undergraduate, graduate and post graduate level, in Italy and in foreign institutions. Maurizio Cisi can be contacted at: Questo indirizzo email è protetto dagli spambots. È necessario abilitare JavaScript per vederlo..

Elisa Giacosa received a PhD in Business Administration in 2003. She is currently an Assistant Professor of Business Management at the University of Torino (Italy) and she obtained the Certification for Associate Professor in Business Management.
She teaches the Financial Accounting (Italian undergraduate) and International Financial Accounting courses (Italian graduate) in the University of Turin, Italy. She was an Erasmus Visiting Professor in some foreign universities. She undertakes research integrated with the Department of Management of the University of Torino. Her main areas of research include financial analysis, food businesses, family businesses, crisis management, and fashion firms. She has published in many refereed journal articles, contributed chapters and books and presented papers to conferences on a global basis.
She is an Associate Fellow of the EuroMed Academy of Business. Elisa Giacosa can be contacted at: Questo indirizzo email è protetto dagli spambots. È necessario abilitare JavaScript per vederlo..