Today, sustainability-related information—information about the risks and opportunities arising from a company’s interactions with its stakeholders, society, the economy and the natural environment—is increasingly integral to economic and investment decisions. Responding to the demand for such information, the IFRS Foundation created the ISSB.| www.ifrs.org
Analyst forecasts may not take into account the distribution, particularly the skewness, of potential outcomes. A forecast of the most likely profit can significantly differ from the more relevant probability weighted expected value. Whether a forecast is a mean or a mode is also important in financial reporting. Most IFRS standards, including IFRS 9 regarding loan impairments, require a probability weighted expected value; however, this is not universal. In some cases, such as IAS 37 regardi...| The Footnotes Analyst
Failed acquisitions do not always result in goodwill impairments. Management optimism is part of the problem, but so is application of the impairment test in a way that maximises the shielding effect of other assets. This reduces the value of goodwill impairments for investors. Analysing the success or failure of M&A is important to assess management stewardship. We applaud the IASB’s proposal for more disclosure, but also believe the goodwill impairment test needs a critical review. Some u...| The Footnotes Analyst
Explore economic and accounting volatility in insurance under ifrs 17, focusing on cash flow estimates and market changes affecting liabilities.| The Footnotes Analyst
Considering the market’s focus on earnings, other comprehensive income (OCI) can be easily overlooked by investors. We think OCI is always important in equity analysis, but if you use a residual income approach to valuation the requirement for a ‘clean surplus’ in your model makes it vital to consider gains and losses reported outside profit and loss. We explain clean surplus accounting and why residual income valuations only work if your forecast financial statements meet the clean sur...| The Footnotes Analyst
Equity beta is a valid measure of investment risk and an important metric in equity analysis. However, don’t just plug into your models the equity beta given by a data provider - beta should be analysed and adjusted by investors with the same diligence that is applied to performance metrics. We present an interactive equity beta analysis model to assist investors in better understanding the drivers of equity beta and its application in equity valuation. The model features the calculation of...| The Footnotes Analyst
