Company Financial Statements: Comparisons in Different Databases
Students are often confused when viewing company financial statements (Income Statement, Balance Sheet, Cash Flow Statement) in different databases. The reason being, that the values displayed, for the same company, often don’t match.
Commercial vs Educational Emphasis
This confusion is understandable. Surely values for the same company, for the same statement, should be identical? In explaining this apparent anomaly, the primary purpose of specialised financial databases needs to be appreciated. That is, to provide data/information to allow analysis of many types of securities – different classes of assets, such as Equities – or companies.
The key user groups are within business and commerce. However, there is sufficient useful content, to also be of value to educational establishments, and therefore students – but business users have priority.
For example, when seeking to gauge the relative performance of two or more companies, from different countries, with different accounting standards, there is a clear logic in being able to compare on a like-with-like basis. Therefore, when looking at a value in an Income Statement, for example, it would be clear which company had superior performance. To compare companies otherwise, the so-called apples with oranges analogy, lacks transparency and is ineffective.
Hence, the evolution of common methods for calculating accounting values in different databases, to ease comparisons between companies. Bloomberg Professional and Thomson ONE.com databases both reflect this need, but use different terminology. A look at a company example is instructive.
Bloomberg Professional – Financial Analysis [FA]
The Income Statement (‘I/S’) for Tesco PLC, a UK supermarket group, is set out below, using the Financial Analysis function, within Bloomberg Professional.
Note that the tab towards the top left: ‘Adjusted’, is highlighted in blue. This is the default view, meaning this is how data is normally displayed for financial statements in Bloomberg Professional. Therefore, companies from different countries can be compared on a like-with-like basis, when the same currency is selected (top right of screen). In the example above, this is set to GBP, or Great Britain Pounds.
Another option is also highlighted – the ‘As Reported’ tab. This selection would display values from the company’s official annual report and accounts.
Thomson ONE.com – Reuters Fundamentals
The Income Statement for Tesco PLC is displayed again, using Thomson ONE.com database: drop down menu selection:
Company Overviews – Fundamentals – Reuters Fundamentals
The ‘Report Format’ option on the left, gives the choice of ‘Company Specific’ (official values – annual report and accounts) and ‘Standardised’. When the ‘Standardised’ view has been selected and ‘Update View’ clicked on, the drop down menu to choose a common currency become available, thus allowing like-with-like comparisons, between different companies.
The ability to quickly search for companies within databases such as Bloomberg Professional or Thomson ONE.com is an effective means to locate company financial statements and take advantage of like-with-like comparisons.
When viewing financial statements within databases, the realisation that a company’s annual report and accounts is the ultimate (official) source, represented by ‘As Reported’ in Bloomberg Professional and ‘Company Specific’ in Thomson ONE.com, can help to avoid confusion for students, in conducting company analysis.
Bloomberg Professional and Thomson ONE.com are databases available to current students and staff of The University of Manchester.