By Professor Joel Litman
Chief Investment Strategist, Valens Securities and Professor at Hult International Business School
Thursday, 28th April 2016
11:30 AM – 1:00 PM (lunch only)
11:30 AM – 4:00 PM (lunch & workshop)
The First National Bank Building Room: The Training Room
332 Minnesota Street
St. Paul, MN 55101
The Gross Distortions Lurking in the Financial Statements and How To Greatly Improve Equity and Credit Research
Lunch Only (11:30 am – 1 pm):
The content of this luncheon program has been one of the most popular across CFA Societies around the world. It is also a preview of the afternoon workshop immediately following the luncheon. (The afternoon workshop is optional.)
GAAP, IAS, and IFRS Financial Statements don’t report economic reality. Instead, they provide a collection of mis-categorized, inconsistently measured, and misunderstood metrics that distort financial analysis.
When financial statements are properly adjusted to the purpose of the analysis, accounting distortions are systematically and manually removed. Through this, one gains an entirely new understanding of business performance and thereby equity valuations and credit analysis.
Seemingly endless controversies around the cost of capital, use of multiples, terminal values, and DCF models seem far more reasonably solvable. The goal is the achievement of an extremely practical framework for fundamental financial research.
Afternoon Workshop Intensive (1-4 pm)
Fixing GAAP Distortions: Detailed Line-by-Line Adjustments for Determining Economic Reality
This detailed workshop immediately follows (and requires attendance of) the lunch program, “The Dark Side of Financial Statement Analysis: The Gross Distortions Lurking in the Financial Statements and How To Greatly Improve Equity and Credit Research.”
This line-by-line program walks through the detailed distortions and calculations needed to adjust financial statements to reach economic reality.
Specific topics include identifying and adjusting distortions stemming from as-reported items such as depreciation, accumulated depreciation, research and development, historical cost accounting, goodwill, intangibles, asset impairments, special items, off-balance sheet leases, pensions and others.