Based on classroom use and reviewer feedback, a number of substantive changes have been made in the fourth edition to further enhance the MBA students’ experiences:
- Updated Financial Data: We have updated all Focus Company financial statements and disclosures to reflect each company’s latest available filings. We also explain the SEC’s new IDEA financial statement retrieval software.
- Updated Assignments: We have updated all assignments using real data to reflect each company’s latest available filings and have added many new assignments that also utilize real financial data and footnotes.
- International Financial Reporting Standards (IFRS): We have added new IFRS Insight boxes and IFRS Alert boxes throughout the text to introduce students to the similarities and differences between U.S. GAAP and IFRS. In addition, we include expanded coverage of IFRS by module and topic in a new appendix to the book (Appendix D).
- Fair Value: We have added discussion of the Fair Value option throughout the text as appropriate.
- New Focus Companies: We now utilize General Mills instead of Home Depot as the focus company of Module 4, Hewitt Associates instead of Accenture as the focus company of Module 9, and American Airlines instead of Southwest Airlines as the focus company of Module 10.
- ROA Coverage: We introduce students to profitability analysis in Module 1 with a very basic introduction to ROA and ROE, and defer the introduction of RNOA with operating and nonoperating components to Module 4.
- Simplified Operating Tax Coverage: We have simplified the method for calculating the tax on operating and nonoperating profit in Module 4.
- DuPont Model: We include a new appendix to Module 4 that explains and illustrates the traditional DuPont Model using financial information for General Mills.
- Focus on Classification issues related to R&D Expense: We have rewritten the R&D expense section of Module 5 to focus on classification issues relating to R&D costs.
- Simplified discussion of income taxes: We have rewritten the presentation of income taxes in Module 5 in a much more intuitive manner to focus on the accrual aspects of the tax entry instead of book-tax reversing differences.
- Intercorporate Investments: Consistent with recent changes in accounting standards, we have revised Module 7 to emphasize investors’ control of securities and deemphasize the percentage of ownership as the determining factor in selecting the method used for financial reporting.
- Credit Ratings: We have expanded the section on Credit Ratings in Module 8 to add a discussion on trends in credit ratings. We have also updated the credit rating statistics to reflect the latest publication of Moody’s Financial Metrics.
- Restricted Stock: We have updated the stock compensation section of Module 9 to include an expanded discussion of restricted stock units and employee stock options.
- Lease Capitalization: We illustrate the lease capitalization process in Module 10 using Excel (and HP and TI financial calculators along with the traditional present value tables).
- Updated Pension Coverage: Our discussion of pensions in Module 10 continues to reflect the recent changes in pension accounting. We have also expanded our analysis of pensions to focus on profitability and cash flow effects.
- Special Purpose Entities. We have moved the sPe discussion into the appendix to Module 10 and have revised that discussion to reflect the pending standard revision for QsPes.
- Revised Forecasting Module: We have completely rewritten Module 11 on forecasting financial statements to help students understand the forecasting process. The revised module is built around Procter & Gamble and introduces a 4-step process that simplifies and codifies the forecasting process for students. We provide a detailed discussion of each item forecasted, together with references to items P&G highlights in recent analyst meetings. We provide a real-world forecasting example by analysts from Oppenheimer & Co. in the appendix.