The Financial Reporting Blog

A weekly update on financial reporting topics curated by Mercer Capital’s Financial Reporting Valuation professionals


Market Trends: 3Q17 Update

The first three quarters of 2017 were active for U.S. markets.  Major indices were characterized by low volatility and upward momentum against a backdrop of tightening monetary policy and strong economic indicators.  Private equity saw steady deal flow despite challenging market conditions, and record levels of venture capital deployment were seen amidst declining deal volume as capital continued to gravitate to the unicorns.  With one quarter left, we take a look at market activity during the first three quarters of 2017.   

Basics of Financial Statement Analysis

Football coaching legend Bill Parcells famously said, “You are what your record says you are.” Adapting that thought to the corporate world, one could say, “Your company is what its financial statements say it is.” Although we would not deny that there are important non-financial considerations in business, the remark strikes close enough to the truth to underscore the importance of being able to read financial statements. Accounting is the language of business, and financial statements are the primary texts to be mastered.

Our latest whitepaper is intended to help readers develop an understanding of the basic contours of the three principal financial statements. The balance sheet, income statement, and statement of cash flows are each indispensable components of the “story” that the financial statements tell about a company. After reviewing each statement, we explain how the different statements relate to one another. Finally, we provide some guidance on how to evaluate projected financial statements.

Social Capital’s Backdoor Unicorn IPO

We have recently discussed the changing dynamics of the IPO market and startups’ shifting perspectives in regards to going public.  Public offerings haven’t all gone wrong this year, but latest rounds of unicorn IPO flops appear to have dampened some investors’ outlook on the traditional IPO route.  Nevertheless, unicorn investors still need liquidity and are turning to creative ways to get the IPO pipeline flowing again.

A New Framework and Credential for Financial Instrument Valuation

Global accounting standards increasingly call for financial measurements and disclosures that comply with a defined measurement objective, such as fair value.  Additionally, financial instruments are becoming increasingly complex in their terms, conditions, and structure.  As a result, the AICPA has announced the creation of a new Disclosure Framework for the Valuation of Financial Instruments (the “DF-FI”) and a new professional credential relating to financial instruments called the CVFI (Certified in Valuation of Financial Instruments).

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