Impairment and Derecognition of PPE an ...
While depreciation and amortization spread the cost of a long-lived asset over its... Read More
Analysts tend to base their financial statement analysis on the company’s audited, annual financial statements to get a relatively accurate picture of its financial position and performance. In this case, the annual financial statements audit must have been done by an independent auditor. However, other important sources of information can be relied upon in this process to facilitate informed investment decision-making.
Other than supplementary and annual financial statement information, financial statement analysis can be conducted using the information provided by a company in its annual report or other publicly available documents such as proxy statements. These sources can be grouped by origin:
Economic, industry, and peer company information helps put a company’s financial performance and prospects in perspective. An analyst’s effectiveness depends largely on information from sources outside the company.
Question
Information sources for financial statement analysis can be categorized into different origins. Which of the following options represents an example of a “proprietary third-party source”?
- Earning calls hosted by the company.
- Data and reports from industry-specific consultancies.
- Conducting surveys and conversations commissioned by an analyst.
Solution
The correct answer is B.
Data and reports from industry-specific consultancies is an example of proprietary third-party source.
A is incorrect. This is an issuer source of information.
C is incorrect. This is proprietary primary research.