Management-accounting

Given the glowing rating this book has received from most reviewers, I have been somewhat disappointed with this book. My main thought is this: This is a good book for non-accountants to keep as a *reference text* since the authors' do a good job of explaining technical financial accounting matters in a straightforward way. However, I do not think this is a good book to actually *learn financial statement analysis* from.

The book tends to focus on technical accounting details while ignoring other important aspects of analysis (e.g., econometric methods, the relationship between the decision model and the nature of the analysis, etc.). It is difficult to tell what the authors see as the most important, central concepts and methods in financial statement analysis. One gets the idea that if you were to ask the authors "What are the really important concepts and methods in this book?", they would answer "Oh, it's *all* good!"

In my experience as an analyst, technical accounting details were rarely important--even when using historical financial statement data to develop financial simulation models for firms. There's a simple explanation for why this is so: An individual firm's financial statements might be "garbage," but the only reasonable way of telling this is by making inferences from the relationship between exogenous economic factors, competitors' financial results (on average), and the individual firm's results. It's about the only reasonable way to extract signals (likely economic "truth") from noisy financial statement data.

I definitely agree with previous reviewers who stated the book is poorly written: it is often both wordy and vague. Consider the (lack of) discussion on p. 332 of the important topic, R&D expenditures:

"Companies invest in ... (R&D) because they expect ... profitable future products. However, absent a resultant commercial product, these expenditures may have not value to the firm. Further, the value of any product may be unrelated to the amount spent on R&D. Due to valuation uncertainties, R&D is generally unacceptable to creditors as security for loans."

I think they mean this: Firms make investments since they expect economic returns on them, but return on R&D expenditures is usually very unpredictable. (Whew. I'm glad they told me! Now I won't feel stupid when talking to other analysts.) The authors then proceed immediately to a summary of accounting standards on R&D expenditures. (This is financial statement analysis?)

It's not clear either that the purpose of presenting a cohesive view of financial statement analysis is served by the sometimes excessive references to empirical research by accounting academics. A cynical reader might suspect this is done to ingratiate the book with accounting professors who will make it the required text for their course!

In the end, I think the book fails to explain fundamental concepts and methods of analysis by which specific information is derived from financial statements for input to specific decision models. What's the antidote? Get Fridson (Wiley) and Bergevin (Prentice-Hall): Nice straightforward books that really explain how to do financial statement analysis.

After reading the reviews on this book, I feel that I must comment on the book's high quality.

In order to fully appreciate this book, an understanding must exist as to where the material fits in the financial analysis process. Clearly this book is not meant to explicitly teach readers how to build financial models; other books are available for that purpose. This book is designed to teach readers how to thoroughly read, understand, and more importantly, become an astute critic of the language of financial statements, GAAP.

I disagree that technical accounting details are not very important in analysis engagements. Rather the opposite holds true in a majority of cases: One must thoroughly understand technical accounting and the implications that it has on economic reality in order to build quality financial models. Otherwise, "junk in/junk out" models will result.

Given the highly publicized debacles that have recently occurred in the financial world, including Enron, the importance of distinguishing technical accounting from economic reality has become obvious. This book does effectively explain and build off the foundations of GAAP; however, this book is primarily focused on helping an analyst analyze and question the quality of financial statements versus how to simply prepare them. This is the big difference between this book and technical accounting textbooks.

Of course, building financial models for decisions is the end objective of any analyst. However, this book is a must read in building quality financial models and projections. Again this book is not a financial modeling textbook, nor a technical accounting manual. Rather, it is a critical bridge between technical accounting material and decision modeling material. I recommend taking the time to read this excellent book and walk across the bridge before moving on to modeling.

This book is great!!! I have finished reading the assigned chapters for the CFA test and I already feel way more confident than I did last year after using Stalla study notes. Buy the book because it helps you way more in terms of examples and explanations. Trust me I know.
Note: Example are clear and concise!!!

A must-buy for all finance majors studying in college. As a university student majoring in accounting and finance, I found this book to be the most insightful, understandable and practical finance book I've ever read. It can be used as a reference to other important finance books out there like the famous Brealy & Myers book "Principles of Corporate Finance".

This book is required at Harvard Business School and is used at top B-schools and bank management trainee programs around the country.
I used the book during my MBA program, even though it was not required. My study group members always requested that I bring it to group meetings. I even had a classmate approach the author (who happens to be my father) at my graduation and ask for his autograph.
The book introduces complex finance concepts like net present value in non-academese language and the real-world examples reinforce the concepts.
I strongly recommend this textbook to anyone preparing to enter business school or embarking on a job in financial analysis.
Professor Higgins is a beloved teacher at his home institution, the University of Washington. You can share in a little of his vast expertise and gift for teaching by reading his book, Analysis for Financial Management.

A book that every prospective MBA should have, as it is very clear and gives a lot of resource listings and examples. Recommended for anyone that need to deal with financial issues.

What makes it even better, is that it lives up to its back cover: it turns Finance into Management, or at least tries very hard to show what a CFOs life is really about, in practical examples.

Very strongly recommended for people that need to understand what being a CFO is about (all prospective MBAs) or people that need to understand what choices sometimes have to be made in finance.

This book is so helpful and wonderful. I bought two and gave one to my daughter who has just gotten married and she loved it too. A must-read for people to need to get straight with their financial planning!

This book completely lives up to it's 24 hours expectation. After reading it, I feel as though I know exactly what to do with my financial plans. This book has intelligent information with quite a touch of humor to go along with it. I think everyone planning for their future whether they are old or young should definitely read this book. Take it from me, it is incredibly helpful!