Analysis of a Bank Based on Financial Statements and Other Factors
From the previous learning outcomes, we learned about the relative global systemic risks across industries, the CAMELS approach for analysis of banks, and other factors not addressed under the CAMELS approach. In this section, we delve into combining the various…
The CAMELS Approach
Other Factors to Consider when Analyzing a Bank
While the CAMELS approach to evaluating a bank is reasonably comprehensive, it does not address some of the banks’ attributes. In this section, we will discuss bank attributes that are either unaddressed or not adequately addressed by a CAMELS analysis….
Financial Regulations of Financial Institutions
We mentioned in the previous learning outcome statement that financial institutions’ systemic importance results in heavy regulation of their activities. Financial regulation is a form of supervision, subjecting financial institutions to specific requirements, restrictions, and guidelines in an attempt to…
How Financial Institutions Differ from Other Companies
A financial institution is an intermediary between providers and recipients of capital or debt that provides banking, insurance, and investment services. There are various types of financial institutions consisting of banks (deposit-taking, loan-making institutions), investment banks, clearinghouses, credit card companies,…
Analyzing the Impact of Foreign Currency Fluctuations on Financial Results
So far, we have mostly analyzed a multinational parent company with only one subsidiary. It made the analysis easier as we were able to relate the effect of the translation method chosen to the consolidated financial statements for the specific…
Impact of Changes in the Components of Sales on Sales Growth Sustainability
Changes in volume and prices primarily propel sales growth for a multinational corporation. Besides that, exchange rate changes between the reporting currency and the currency in which sales are made also drive sales growth. Reasonably, growth in sales that comes…
Impact of Multinational Operations on a Company’s Effective Tax Rate
Accounting standards require companies to explain the relationship between tax expense and accounting profit. This explanation is presented as a reconciliation between the average effective tax rate and the applicable statutory rate. The effective tax rate is computed as the…
