This was one of two textbooks used in a financial statement analysis course I took for my MBA. Most chapters are down-to-earth and as a whole the book is well-written.

The other text we used was Penman's "Financial Statement Analysis and Security Valuation" which was also a great resource as far as gaining a basic understanding of the mechanics of financial statements and how to build a valuation model.

I contrast the two books because while Penman provides a run-down of several different models analysts can use (and does a good job of arguing for the Residual Income Model of valuation model as being the best), Palepu delves into the implications of companies' choices of accounting methods and provides more insight into what different kinds of businesses should look like in terms of their financial statements.

The cases at the end of each chapter add a lot of value to the text because they get students to focus on the specific issues detailed in each chapter. By picking apart different companies' financial statements we learned to use financial statements to assess the success or failure of companies' efforts to carry out their business strategies.

I rate it "Good - 4 stars"

12 of 13 found the following review helpful:


A good book blending accounting, investing and finance !  Aug 20, 1999 By Jurgen Schraepen
This book is also a bestseller in Japan. Here someone called it "The only textbook now available that broadly explains accounting figures in the valuation model of the firm". This is a good book for beginners. Although the contents might be somewhat easy, the order in which it is written is very meaningful. You will probably have read everything in this book somewhere else, but certainly not in this order ! The importance of the ideas in this book go beyond its contents !!

1 of 1 found the following review helpful:


Kindle Edition does not include cases  Jan 19, 2012 By dwhite78
This is a review of the Kindle edition of the textbook rather than the content of the book itself. The Kindle edition does NOT include the cases, even though it's offered as a digital copy of the printed version that DOES include the cases.

Amazon's customer service was very helpful and prompt in issuing a refund for the Kindle copy. So, overall, two stars for the error in offering the Kindle book as equivalent to the printed version, and five stars to Customer Service for their assistance.


The most comprehensive book I've read on valuation  Dec 05, 2011 By Barbara Messina "Looking for new ideas"
This book looks at more than financials when analyzing the financial situation of a business. It makes more sense to incorporate the strategy of a business, and this book provides a good framework for doing that.


Book review  May 08, 2011 By Chidu
This one was required for my Capella Online MBA. The book has Business Analysis and Valuation explained in a simpler way.

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