Financial Modeling and Valuation for Post-Employment Benefits
Financial Modeling for DC Plans Modeling DC plan expenses is integrated within operating expense predictions. By forecasting SG&A (Selling, General, and Administrative) expenses, you are indirectly also modeling the DC plan expenses for employees within those operations. The reason this…
Effects of Post-Employment Benefits on Financial Statements
Post-employment benefits are provisions offered by employers to their retired employees. These benefits can have various implications on an organization’s financial statements. Nature of Post-Employment Benefits Types and Overview Post-employment benefits can be in the form of cash benefits like…
Share-Based Compensation in Financial Statement Modeling and Valuation
Share-based compensation is usually integrated into operating expenses on the income statement based on an employee’s role. When forecasting operating expenses or margins, analysts often implicitly consider share-based compensation. If, for instance, Research & Development (R&D) expense, which includes a…
Accounting for Share-Based Compensation
Share-based compensation is a form of remuneration where employees or other stakeholders are granted equity or options to acquire equity, often in the form of company stock. This method aligns the interests of employees with those of shareholders and does…
How Current Rate Method and the Temporal Method Affect Financial Statements and Ratios
Both the current rate and temporal methods have a significant impact on the parent company’s financial statements and ratios. The following example demonstrates the effects under each translation method. Example: Effects of Using the Current Rate and the Temporal Methods…
Effects of a Defined Benefit Plan’s Assumptions on the Defined Benefit Obligation and Periodic Pension Cost
Understanding the effects of assumptions on the estimated pension obligation and periodic pension costs helps in the interpretation of a company’s financial statements. Moreover, it aids in the evaluation of whether the assumptions are relatively conservative or aggressive. The amount…
Use of Pension and Other Post-employment Benefit Disclosures to Assess a Company’s Assumptions and their Impact on the Financial Statements and Ratios
Assumptions and estimates made when calculating pension-related amounts can affect comparative financial analysis using some ratios based on financial statements. Assumptions Different companies make different assumptions, e.g., different discount rates, and this affects comparisons across companies. Recall that a company…
