Chapter 8 Flashcards
(24 cards)
Text Mining
Analysis that analyzes the frequency of words and matches them to a sentiment dictionary
Loughran and McDonald dictionary 6 sentiment categories (READ)
Positive
Negative
Uncertain
Litigious
Modal
Constraining
How can analysts use text mining?
To track sentiment proportion over time
XBRL acronym
eXstensible Business Reporting Language
XML acronym
eXstensible Markup Language
What do Tags do?
Allow data to be quickly transmitted and received
Does the SEC require tagging?
Yes as of June 2011
What does the SEC require tagging of? (READ)
Numbers and dates on balance sheet, income statement, statement of comprehensive income, statement of cash flows, statement of stockholders equity
Text blocks, including numbers and dates in footnotes, and management discussion and analysis (MDA)
4 key aspects of XBRL (READ)
Standardization
Tagging System
Regulatory Use
Efficiency and Accuracy
How can analysis of XBRL data be difficult?
Different companies may use different tags
How can the difficulties of analyzing XBRL data be avoided
Using software to facilitate analysis and reporting of XBRL
4 main types of tools for accounting analytics
Excel
Power BI
Tableau
Alteryx
Ratio Analysis
Assesses relationships between financial items to understand a companys financial and operational performance
Common Size Financial Statements
Contains only basic accounts that are common across companies
Vertical Analysis
Shows the proportional value of accounts to a primary account
4 types of financial ratios
Liquidity
Activity
Solvency/Financing
Profitability
Liquidity ratios
Measure a companys ability to meet short term obligations
Activity Ratios
Assess operational efficiency
Solvency/Financing Ratios
Measure financial risk and ability to sustain operations long term
Profitability Ratios
Assess a company’s profitability and future potential
DuPont Ratio
breaks down return on equity into 3 types of ratios (profitability, activity, and solvency)
Horizontal Analysis
Evaluates changes in financial values over multiple periods
Sparklines
Small compact visualizations that fit within a single spreadsheet cell to summarize trends efficiently
What does XBRL do?
It, organizes, defines, and describes each key data element
