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Overview of the study (FSA)Challenges of FSA for BPOs
Findings
Chris Naval
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Financial Statement Analysis
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meet external reporting obligations speak of the company
performanceand activities
no meaningful conclusions can bedrawn from these statements
alone
decision making purposes
Financial analysis is the scaffold ofmanagerial decisions
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Also known as Offshore BPO BPO is the transfer of
businessprocesses from one company to the
other BPO companies are externalcompanies that accept BPO
contracts
low-cost human resource eliminates human resource dilemmas
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Comparison of the portfolio ofoutsourced services
Absorbs a lot of sudden changes
Collection of information Conveyance of information
Different approach in analysis due
multi-departmental environment Risks for new projects
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Theoretical Framework
Conceptual Framework
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Comparability Accounting Limitation
Financial Ratio Limitations
Need to Look Beyond Numbers
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Differences in accounting methods
Estimates and assumptions
Intrinsic Value versus Market Value
Basis on the time when those data aregathered
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Challenge of avoiding windowdressing techniques
Companies wanting to be better than
average Taking note of risks
Amount or scale of the data analyzed
Other ratios looks good and othersthat look bad
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Companies that are operating in a highlychanging competitive
environment
Firm that operates in different divisions
and industries Different companies that operate in
different industries each having differentmarket conditions
Users are more concerned about currentand future information
Generates more questions
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AccountingExplained.com. Advantages and Limitations ofFinancial
Ratio Analysis. 2011
B. Bryant, The Advantage & Disadvantages of
FinancialStatement Analysis, 2011
Brigham E, Houston J, 2004, Fundamentals of FinancialManagement,
Tenth Edition, page 97 -101
CliffsNotes.com. Financial Statement Analysis Limitations.5 Sep
2011
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FinancialStatementAnalysis.org. Financial StatementAnalysis.
2011
Garrison R, Noreen E, Brewer P, 2008, ManagerialAccounting,
Twelfth Edition, page 717
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Analysis Approach, 2nd edition,page 122- 125
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