Prior research established a seven dimension taxonomy of financial ratios. Arguably, advances in business practices, changes in financial reporting standards, and technology have affected the underlying relationships of this taxonomy. This study proposes to identify the extent to which the previously identified relationships have changed, and, if appropriate, to establish an entirely new taxonomy of manufacturing industry financial ratios.In addition, this study substantially improves and extends prior work in two areas. First, it utilizes advanced statistical methodologies and computing technologies that were unavailable to previous researchers. Second, it investigates not only the current taxonomy of manufacturing industry financial ratios, but also its stability over a recent ten year period.Our findings indicate that eleven factors now comprise the financial ratio taxonomy. Notably, a separate cash flow factor did not surface in this study as was the case in earlier work; rather, cash flow ratios correlated with accrual-based measures. Finally, our study identified a new current position factor.2

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; mso-pagination: none;" class="MsoNormal"><span style="color: black; font-size: 10pt; mso-themecolor: text1;"><span style="font-family: Times New Roman;">Over several decades, the Financial Accounting Standards Board and International Accounting Standards Board have enacted numerous changes to the controversial lease accounting rules. As currently prescribed, operating leases are treated as rental arrangements whereby the lessee does not record a liability - a situation generally referred to as off-balance sheet financing. In an attempt to increase transparency and comparability, the FASB and IASB will soon require all leases to be capitalized. This paper quantifies the impact of the new leasing standard on the financial statements and ratios of the firms and industries represented in the S&amp;P 100 under a variety of discount rates. </span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

The case for Le Beau Footwear, which is based on actual events, examines the financial and legal decisions concerning a privately held Canadian retailer whose leased premises and entire inventory were destroyed by a suspicious fire in 1990. The focus of the case is on determining the monetary value of the lost profits that resulted from the insurer's delays in paying the indemnified amount. Within this context, this case provides a rich and comprehensive example of the application of the accounting return on investment (ROI) and the market-based opportunity cost of capital (OCC) techniques for valuation of a privately held firm. Further, the case demonstrates a sharp example of applying the results from previous studies of initial public offering (IPO) and small firm effect to make valuation adjustments that reflect the retailer's private ownership status and its small size. This case is intended for use in advanced accounting and finance courses in M.B.A., M.S. in Accountancy, and M.S. in Finance programs.

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="color: black; font-size: 10pt;"><span style="font-family: Times New Roman;">Recent legislative consideration to end the use of the Last-in, First-out (LIFO) inventory method, as well as the movement to adopt international accounting standards which do not permit LIFO, have created anew the debate over how important LIFO is to U.S. businesses. This paper catalogs the use of LIFO during 2007 among the largest 500 U.S. companies by analyzing disclosures from the Form 10-K annual report (or the corporate annual report for privately-held firms). Analysis of the data provides evidence of the frequency of use of LIFO, the financial impact on reported income and on reported assets due to its use, and the particular industry categories that are the major beneficiaries of the method. </span></span></p>

Purpose This study aims to identify a taxonomy of financial ratios derived from financial statements prepared using International Financial Reporting Standards (IFRS). The work first empirically establishes and then statistically validates the taxonomy of financial attributes captured in financial ratios. In 2005, the European Commission required that publicly traded companies in the European Union use IFRS as the basis for financial reporting. In the same year, Australia adopted IFRS as a basis for financial reporting. Since then, 120 countries and reporting jurisdictions have adopted IFRS as the basis for financial reporting. Given that IFRS predominate in the financial reporting world, it seems essential to establish and validate IFRS-based ratio attributes. Only then can reliance upon and comparability of these ratios be warranted (Altman and Eisenbeis, 1978). Using principle component analysis, the authors empirically identify nine stable attributes (factors) for ratios drawn from IFRS-based financial statements from 84 counties. The findings provides an empirical basis to formulate testable hypotheses regarding the predictive and descriptive utility of financial ratios draw from IFRS-based financial statements. Design/methodology/approach The paper begins with a broad category of IFRS-based financial ratios, 50, found in practice and research, including income statement, balance sheet, cash flow, profitability and liquidity measures. Then, a sample of companies from the manufacturing sector is segmented using IFRS as a basis of financial statement reporting. Next, principal component analysis, a method of factor analysis, is applied to empirically identify factors and financial attributes captured in financial ratios used in research inquiry and financial analysis. Findings The authors find that the financial attributes captured by IFRS-based ratios go well beyond the traditional measures of profitability, liquidity and solvency. The authors identify nine factors that are interpretable and stable over the period, 2011-2015: asset relationship, asset turnover, capital structure, expense insight, fixed asset usage, inventory turnover, liquidity, profitability margin and performance return. Interestingly, the authors did not find a separate cash flow factor. Most importantly, the results corroborate that IFRS-based ratios are consistent and comparable, despite innate country differences that have been shown to influence the application, interpretation and use of IFRS. Research limitations/implications The efforts are limited to the manufacturing sector. The financial attributes may be different in service, distribution and retail sectors. Also, limiting the effort are the ratios selected in this study. A broader range of ratios may widen the identification of unique stable factors over time. Practical implications The findings provide a basis for research and analysis efforts regarding the validity, comparability and stability of IFRS-based financial ratios. Most importantly, the results corroborate that IFRS-based ratios are consistent and comparable, despite innate country differences that have been shown to influence the application, interpretation and use of IFRS. The findings should be of interest to international and national financial reporting standard setters, investors and analysts. Originality/value An empirically evidenced classification system for IFRS-based financial ratios has yet to be determined based on a financial statements across a wide breadth of countries and reporting jurisdictions. Identification of stable interpretable factors, financial attributes, has been limited. The first is that inquiry has been limited to domestic-based, such as US Generally Accepted Accounting Principles, financial ratios. The second is inquiry has been limited to IFRS-based financial ratios within a specific country.