1. View SEC XBRL data with Edgar http://www.sec.gov/edgar/searchedgar/webusers.htm#.U8rQH7GfjOs
2.Five tools to download XBRL files into EXCEL in Journal of Accountancy http://www.journalofaccountancy.com/Issues/2013/Apr/20126677
3.View firm XBRL instance document and taxonomy information with Rivet http://rivetdragonview.sourceforge.net/
I. What is EBIT and why do financial statement users care? EBIT is a firm’s earnings before interest and taxes. Financial statement users care about what decisions management makes within the context of the firm’s value chain. Separating off the debt financing and tax management figures focuses attention on the basic firm earning activity.
II. What does XBRL have to do with EBIT? XBRL primary function is tagged data of financial statement line items and footnotes. EBIT is not an XBRL tagged a line item by that name and thus a problem may occur in getting the number you want for interpretation’s purposes. The most equivalent XBRL tag for EBIT is us-gaap:OperatingIncomeLoss. An example of $86,530,000 from the 2011 Barnes Group Inc’s 10K report on www.sec.gov (the ticker symbol is B) is
<us-gaap:OperatingIncomeLoss contextRef=”Duration_1_1_2010_To_12_31_2010″ unitRef=”Unit1″ decimals=”-3″>86530000</us-gaap:OperatingIncomeLoss>
But, what if the previously referenced XBRL tag is not available or you want to cross-check the number whether it was specified appropriately for your ratio analysis? Then, a calculation may be performed utilizing several XBRL tagged line items. Take the Income/Loss from Continuing Operations and add back the Income Tax and Interest Expense. In the case of the Barnes Group the result above does not match because there is an Other Expense line item below the Operating Income/Loss number. See the tags and calculations below
<us-gaap:IncomeLossFromContinuingOperations contextRef=”Duration_1_1_2010_To_12_31_2010″ unitRef=”Unit1″ decimals=”-3″>53278000</us-gaap:IncomeLossFromContinuingOperations>
<us-gaap:IncomeTaxExpenseBenefit contextRef=”Duration_1_1_2010_To_12_31_2010″ unitRef=”Unit1″ decimals=”-3″>10758000</us-gaap:IncomeTaxExpenseBenefit>
<us-gaap:InterestExpense contextRef=”Duration_1_1_2010_To_12_31_2010″ unitRef=”Unit1″ decimals=”-3″>20014000</us-gaap:InterestExpense>
The sum of the above three figures is $84,050,000 which is not the previously mentioned number. Users of financial statements are advised to cross-check XBRL information for EBIT and other financial terms which are not line items.
III. Where is executive compensation information? Executive compensation is one of the most frequently discussed topics in the popular press, and yet where is it in the XBRL taxonomy? The first choice of the income statement doesn’t have it as a separate line item, probably because most companies do not report it there.
The footnotes have the executive compensation information. In www.askaref.com select search terms like “share-based” or “stock compensation” and then choose the Other(e.g., footnotes) tab as the XBRL Tag Search Options. If you need that GAAP codification reference, it is under Topic 718 Subtopic 10 Section 50
IV. XBRL NUMERICAL VALUES IN FINANCIAL ANALYSES
The character of an XBRL information record may or may not have an effect upon financial analyses. If the information is used in financial ratios for a particular company XBRL file, then the financial analysis is of good form with no XBRL effect because divisions eliminate any scale factor consequences. If the XBRL data is to be used in numerical financial analyses like present value computations or compared in absolute terms with other firm XBRL data files, then read on.
A.An basic example line item is:
contextRef=”AtDec312007_audited” unitRef=”USD” decimals=”INF”>1736000000
The number 173600000 is in United States dollars (other country currencies may be used in an XBRL document). The decimals field INF indicates the number is face value.
V. Decimal field has a significance feature. The following Heinz example has -3 decimal feature which means the numerical value is rounded three places. And, the Heinz statements carry this number in thousands so that the dollar figure is $724,311,000. If the financial analysis calls for nominal data, then it is important to specify information appropriately.
<us-gaap:CashAndCashEquivalentsAtCarryingValue contextRef=”BalanceAsOf_27Apr2011″ unitRef=”USD” decimals=”-3″>724311000</us-gaap:CashAndCashEquivalentsAtCarryingValue>
VI. Multiple tag references occur when the firm tags member information from tables with the XBRL tag. Make sure that you have the right line item information. For example, TYCO INTERNATIONAL LTD had the following data in their 9/24/2010 XBRL file for the XBRL tag “us-gaap:Assets”
VII. Time period is relevant for income statement and cash flow statement information. Check the contextref field if it is for a quarter or annual period.
A.Real world examples of Financial Analysis and Programming Issues
1. First Example of Financial Analysis utilizing XBRL
It is important in financial analysis to know what data you are analyzing. Otherwise, it is garbage in, garbage out (GIGO) which means bad information makes bad decisions. Therefore, analysts should validate the nature of the information used in financial ratios and firm valuations. This first example will start out with an easy one and will look at the liquidity of the firm using the current ratio. The current ratio of total current assets divided by current liabilities is representative of a firm’s ability to pay its bills in the near term.
2.The example firm is Heinz which is also the company used in the professors “get acquainted with XBRL” section of this blog. A Heinz 10-K text file can be found at SEC web site by following the path of:
ii) Search for Company Filings” in the “Filings & Forms” section
iii) Choose “Company or fund name, ticker symbol ….” And then enter the company name “Heinz”
iv) choose “heinz” from the list of filings and
v) open at 10K text file through a “document” button.
3.In terms of details, scrolling down in the balance sheet will display the following for the balance sheet assets:
4.The liability section of balance sheet follows:
VIII. The current ratio for April 27, 2011 is current assets /current liabilities of 3,753,542/4,161,460 which equals .90 . From this point, an analyst will want to compare the Heinz current ratio versus last year’s ratio and the industry average. However, first the analyst should check to see what the line-items represent. This is an important step because without understanding how the accounting line-items are calculated, the numbers are potentially meaningless. Therefore, the next step is to trace the XBRL account from the XBRL instance document to see what the XBRL taxonomy definition says for these account line-items.
6.Back up one level to the Heinz files and open the XBRL instance document. Use your browser command to search first 373542 for the Total Current Asset XBRL line-item tag and
7.Search again 416146 for the Total Current Liability XBRL line-item tag.
8.Now, go to www.askaref.com and we will check the accounting definition of the current ratio numerator which appears consistent with general financial statement usage.
9. and denominator which appears consistent with general financial statement usage.
And the Second ASKAREF Search Example for “Liabilitiescurrent”