Explain LIFO Reserve and LIFO Liquidation
US GAAP requires companies that use the LIFO method to disclose the amount of the LIFO reserve in the notes to the financial statements or on the balance sheet. It is important to review disclosures on LIFO reserves to determine…
Measurement of Inventory at the Lower of Cost and Net Realisable Value
Under IFRS, inventories may be measured and carried on the balance sheet at a lower cost and net realizable value. US GAAP, on the other hand, specifies the lower cost or market to value inventories. Market value, for this purpose,…
Implications of Valuing Inventory at Net Realizable Value
Under IFRS, whenever the value of inventory declines below the carrying amount on the balance sheet, the inventory carrying amount must be written down to its net realizable value. Most importantly, the loss must be recognized as an expense on…
Presentation and Disclosures Relating to Inventories
Disclosures are very useful to users of financial statements, especially when analyzing a company’s performance. Coincidentally, the disclosure and presentation requirements are very similar under IFRS and US GAAP. Presentation and Disclosures Relating to Inventories Under IFRS, the following financial…
Examining a Company’s Inventory Disclosures and Other Sources of Information
Financial statement analyses that fail to consider the impact of differences in methodologies adopted, disclosures made, and presentation formats are likely to result in faulty conclusions. An analyst has to have a critical mind and give consideration to the information…
Analyze and Compare the Financial Statements of Companies
A company’s choice of inventory valuation method can have a significant impact on the presentation of its financial statements. Financial items such as cost of sales, gross profit, net income, inventories, current assets, and total assets as well as the…
Use of Cycles for Technical Analysis
Cycles are trends or patterns that may be exhibited by the securities market. The trends or patterns directly affect prices, leading to seasonal or periodical fluctuations that may recur over and over again. Cycles may also lead to some securities…
The Elliott Wave Theory
Elliott wave theory was developed by Ralph Nelson Elliott in late 1930s. His discovery changed the perception about stock market trading, which was thought to be chaotic and disorganized at the time. The theory revealed that trading, in fact, follows…
