Reading 29: Financial Statement Analysis: An Introduction LOS annual, following, statements, 2010

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LOS e: Identify and explain information sources other than annual financial statements and supplementary information that analysts use in financial statement analysis.

Which of the following statements about proxy statements is least accurate? Proxy statements are:

A) not filed with the SEC.

B) available on the EDGAR web site.

C) a good source of information about the qualifications of board members and management.

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Proxy statements are issued to shareholders when there are matters that require a shareholder vote. These statements, which are also filed with the SEC and available from EDGAR, are a good source of information about the election of (and qualifications of) board members, compensation, management qualifications, and the issuance of stock options.

 

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Which of the following is least likely to be available on EDGAR (Electronic Data Gathering, Analysis, and Retrieval System)?

A) SEC filings.

B) Corporate press releases.

C) Form 10Q.

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Securities and Exchange Commission (SEC) filings are available from EDGAR (Electronic Data Gathering, Analysis, and Retrieval System, www.sec.gov). Companies’ annual and quarterly financial statements are also filed with the SEC (Form 10-K and Form 10-Q, respectively).

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Which of the following is an analyst least likely to rely on as objective information to include in a company analysis?

A) Proxy statements.

B) Government agency statistical data on the economy and the company’s industry.

C) Corporate press releases.

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Corporate reports and press releases are written by management and are often viewed as public relations or sales materials. An analyst should review information on the economy and the company’s industry and compare the company to its competitors. This information can be acquired from sources such as trade journals, statistical reporting services, and government agencies. Securities and Exchange Commission (SEC) filings include Form 8-K, which a company must file to report events such as acquisitions and disposals of major assets or changes in its management or corporate governance and proxy statements, which are a good source of information about the election of (and qualifications of) board members, compensation, management qualifications, and the issuance of stock options.