an accounting model-based approach toward integration of

An Accounting Model-Based ApproachToward Integration of Multiple

Financial Databases

Sung Wook Khang

May 1990 WP # CIS-90-14

AN ACCOUNTING MODEL-BASED APPROACHTOWARD INTEGRATION OF MULTIPLE

FINANCIAL DATABASES

BY

SUNG WOOK KHANG

Submitted to the Alfred P. Sloan School of Managementon May 17, 1990, in partial fulfillment of

the requirements for the Degree ofMaster of Science in Management.

ABSTRACT

As the number of publicly available financial databases increases, the need for theirintegration has become more important. The purpose of this thesis is to provide aconceptual foundation for the integration of multiple financial databases by employing anaccounting model. While many approaches toward the integration of financial databaseshave been attempted until now, the feature which distinguishes this thesis is the accountingmodel-based approach which is employed in every step of the database integration.

The accounting model in this thesis has been developed so that it can includeaccounting knowledge, which is represented by the embedded relationships in the model.By utilizing these relationships, most of the critical issues involved in the integration ofmultiple financial databases can be successfully resolved.

In addition to the above-mentioned relationships, since the structure and theterminologies which have been employed in the development of the model reflectcontemporary standard accounting conventions, the model has the advantage of being ableto be applied to integration without any bias toward a specific financial database.

However, there are still many factors which restrict the usefulness of computerizedfinancial databases and thus limit the utility of the integration of these databases.Differences of accounting principles are one of the representative examples. Althoughthese issues are not resolved in this thesis, I believe that as the content of databasesbecomes more sophisticated and more research efforts are directed toward these issues,they will ultimately be resolved in the near future.

Key Words: database integration, accounting model, financial database, accountingprinciples, standard structure, relationship.

Acknowledgements: Thesis Supervisor: Y. Richard Wang; Thesis Reader: Bob Goldberg;Supported in part by Reuters and AT&T.

- 1 -

1. Introduction .................................................................................................................. 6

1-1. Motivation ........................................................................................................ 6

1-2.Goal of Thesis................................................................................................ 6

1-3. Potential User............................................................................................... 6

1-4. Description of Resources................................................................................. 6

1-4-1.Dataline.......................................................................................... 71-4-2.Disclosure II..................................................................................... 71-4-3. LotusOne Database........................................................................... 7

1-5.Assumptions.................................................................................................. 7

1-6. Overview of Thesis......................................................................................... 7

2. Basic Fram ework...............................................................................8

2-1. Underlying Scenario ....................................................................................... 8

2-2. Employed Accounting Techniques..................................................................... 8

2-2-1. Financial Statement Analysis ............................................................ 82-2-2. Financial Ratio Analysis .................................................................. 82-2-3.Profitability Analysis......................................................................... 8

2-3. Overview of Framework................................................................................... 8

3. A ccounting M odel-Based Approach...................................................... 10

3-1.Purpose of Model............................................................................................ 10

3-2.Structure Of M odel.......................................................................................... 10

3-2-1.Fundamental Relationship................................................................... 103-2-2.Description of Structure...................................................................... 15

(1) Hierarchical Structure................................................................ 15(2) Parent-Child Relationship .......................................................... 15(3) Root Account ........................................................................... 15(4)Entity.......................................................................................15

3-2-3. Relationship Representation.............................................................. 15(1) Explicit Relationship ................................................................ 15(2) Implicit Relationship ................................................................ 15

3-2-4. Linkage of Financial Statements .......................................................... 153-3.Implications of Model...................................................................................... 18

(1)S tion ..................................... 18(2)Aggregation............................................................................. 18(3) Restructuring........................................................................... 18(4) Reconciliation of Value Level Conflicts........................................ 18

3-4. General Algorithm for Using Model.................................................................. 18

3-4-1. Explanation of Search Algorithm ........................................................ 183-4-2. Instructions..................................................................................... 19

3-5. Features Of Model............................................ 19

(1) Identification of Associated Accounts........................................... 19(2) Relationship Representation ..................................................... 19(5)Variety of Use.............. .......................................... 19(6)Aggregation............................................. 19

4. Database Integration.......................................................................20

4-1. Standardiz ion & Aggregation ..................................... .................................... 20

4-1-1.Issues........................................... ...20(1) Different Accounting Terms................................20

-2-

(2)Same Terms for Different Concepts..............................................21(3)Data Incompleteness................................................................. 21(4) Different Levels Of Aggregation..................................................21

4-1-2. Approach......................................................................................... 214-1-2-1.Stand.ardindn. ........... ..................... 21

(1) General Explanation.............. ............ 21(2) Process..... ... .... ..... ..... ....... ................... ..21

4-1-2-2.Aggregation...... ....... ..... ..... ............... .................... 22(1) General Explanation............ ...... o . ............ 22(2) Process........ ............. ................. 22

4-1-2-3. Disaggregation................ ................. 224-2. Restructuring ...... .................. ................................ .23

4-2-1.Issues...........................................234-2-2. Approach: Restructuring.... ......................... ...... 23

4-2-2-1. General Explanation................................ .........234-2-2-2. Process.......... ........ .................. 23

4-3. Reconciliation Of Conflicts At Instance Value Level.... . .................... 26

4-3-1.Issues............... ..... .... ... ....... . .......................................... 264-3-1-1. Different Units.... ................................. 264-3-1-2. Conflicts At Instance Value Level.........................................26

4-3-2. Approach: Model-Based Judgement .............................. 264-3-2-1. General Explanation................ ............. 264-3-2-2. Development Of Rules ............ ............... 274-3-2-4. Process.............. ..... .................. ....... .......... 27

4-3-3. Comments.........................................274-4.Other Issue: Currency Difference....... . . .................................... 28

(1) Use Of Currency Database... . . ............................ 28(2)Use Of Common Size Financial Statement....................................28(3) Use of Financial Ratios ........................................................... 28

4-5. Building a Final Version Of Financial Statements.........................284-6.Comments On Cash Flow Statement............................. ................ 28

5. Profitability Analysis............... .............................................32

5-1. Issues.......................................................... 32(1)Different Tax Policies................................................................ 32(2)Extraordinary Income.............................................................. 32(3) Other Income........ ............................. 32

5-2. Calculation of Profitability Ratios... ................................................................. 32

5-3.Analysis........................................................................................................ .32

5-4.Comments...............................................326. Conclusion................................................................34

6-1. Constraints.... ......... . ... ...................... ...... .................. 34

6-1-1. Accounting Principles...... ............ ......... .......... o .346-1-2.Recentness Of Data......................................346-1-3. Consolidation...................... ......... ................... 34

6-2. Final Comments............................. ............ 34

Appendix A: Standardization Table... . .. ................................... 37

Appendix B: Intermediate Results .......................... ....... 43

Appendix C:Comparisons of Accounting Principles .......... ................. 48

-3-

Appendix D: Raw Data From Each Database...................................................51

Bibliography.....................................................................................................................76

-4 -

1. Introduction

1-1. Motivation

With the increasing demand for electronic information, there has been a great influx in the numberand variety of computer-based databases. However, as there is no one database which can provide all thenecessary information, the combination of the information available from multiple databases has becomean important issue. To address this issue, the CIS (Composite Information System) Project is beingundertaken at the Sloan School of Management at MIT [7-121.

The above-mentioned situation is also true in the financial world. As the world economy becomesmore and more globalized, companies must now compete not only in the domestic market, but in theglobal market as well. As a result, in order to analyze their competitive positions in their industries,contemporary companies have come to need information about competitors regardless of their geographicallocations. Thus, to satisfy such needs, a variety of fnancial information service institutes were formed andare now providing fimancial information on various companies.

Unfortunately, however, none of these fiancial information sources cover all of the informationneeded. Instead, each source focuses on one specific category, such as financial information about Fortune500, or companies located in specific geographical areas. Therefore, companies which want to review theircompetitive position relative to other competitors in the globalized market can not but investigate severalinformation sources. In this sense, it would be very helpful to provide companies with an integrated viewof several information sources, and thus allow them to access necessary information without worryingabout the location or the format of each data source.

1-2. Goal of Thesis

The goal of this thesis is to provide an accounting model based approach by which severalfiancial accounting databases can be integrated and present an example of a potential application whichutilizes the integrated information. In doing so, I will build an accounting model and from this perspective,attempt to capture and address the issues involved in the integration of the information from multiplefinancial databases. In addition, I will also identify the limitations involved in using computer-basedfnancial information and thus illuminate areas of further future research.

1-3. Potential User

When I refer to the phrase 'fiancial databases', I primarily mean financial accounting databaseswhich include accounting information such as a balance sheet, an income statement, and etc. Therefore, thepotential user of the implemented version of my model will be as follows:

(1) Companies which want to review their competitive position relative to other competitors in theglobalized industry.If carefully analyzed, financial accounting data from several databases will provide useful historicalinformation about the financial status of competing companies. Therefore, by comparing this data,companies will be able to identify their competitive positions.

(2) Investors who want to make a long term investment in specific companies.Investors will be interested in the fundamental aspect of the financial status of target companies,rather than the short term fluctuation of their stock prices. Analyzing the financial performances ofseveral companies will help investors find good candidates for their investments.

(3) Financial intermediariesOne of the most important tasks of financial intermediaries has been to play the role of agentbetween companies which want to raise funds and investors who want to invest money. Tosuccessfully perform such tasks, financial intermediaries must be able to provide their customerswith a broad and accurate analysis of the financial position of various companies.

1-4. Description of Resources

The financial databases with which I am working in this thesis are Finsbury's Dataline, I.P.Sharp's Disclosure, and LotusOne Database, of which the final can be found in the Dewey Library at theSloan School of Management. These databases are similar in the sense that they provide financialaccounting information about companies. However, these databases basically deal with different companies.

-5 -

For instance, while Dataline primarily provides information on companies located in Europe, Disclosuremainly provides information about U.S. companies. As for the LotusOne database, although it is similarto Disclosure in that it covers a similar range of companies, it differs in that it employs different accountingterms and formats. Also, the LotusOne database can be easily accessed with relatively less time delay andcost. Although in this particular study, I limited the number of databases in order to simplify the initialstep, the basic framework and structuring which is featured in this paper will apply to any integrationregardless of the number of databases.

1-4-1. Dataline

Dataline provides various financial statements from the previous 5 years for over 3000 companies.Accounting data from Dataline mainly covers U.K. companies and a number of European and Japanesecompanies. Financial statements consist of a balance sheet, an income statement, a financing table, andmajor accounting ratios. In addition to financial accounting data, Dataline also provides forecastingfacilities for U.K. companies. The figures in the statements are represented in thousands of pounds.

1-4-2. Disclosure II

The Disclosure II database contains financial and management information on over 12,000 publiccompanies. Company data is extracted from annual and periodic reports filed with the U.S. Securities andExchange Commission(SEC). Therefore, companies whose information is provided in Disclosure have atleast 500 shareholders of one class of stock and at least $5 million in assets. The companies in Disclosuremust also have filed an SEC document containing financials, such as a 10-K, 20-F, or RegistrationStatement within the last 18 months. These companies are primarily incorporated in the U.S., but anumber of non-US companies are also included. The financial data provided by Disclosure includesquarterly and yearly financial statements such as balance sheets, income statements, changes in financialstatus, and key financial ratios. The figures in the financial statements are represented in thousands ofdollars.

1-4-3. LotusOne Database

The LotusOne database is located in the Dewey Library at the Sloan School of Management. Italso provides financial and management information about companies which report to the SEC in the U.S.The information in LotusOne is quite similar to that of Disclosure. But this database has an additionalmerit in the sense that, because several companies covered by this database are also covered by Dataline, Ican easily illustrate important logical connectivity issues by comparing the overlapping information.

1-5. Assumptions

This paper is based on the assumption that all physical connectivity issues have been resolved.That is, all three databases are assumed to be physically connected by communication lines and able tocommunicate with each other without any technical difficulties.

As I mentioned in section 1-1, one of the goals of this study is not to implement a physicalsystem , but to build a conceptual basis for the integration of financial databases. This assumption is basedon the afore-mentioned purpose of my study.

1-6. Overview of Thesis

This thesis largely consists of five sections of which section 1 includes the introduction. Insection 2, I will provide the ground information: the basic scenario upon which this thesis is based, thefinancial accounting techniques employed to analyze the competitive position of companies, and a briefdescription of the steps which I will go through throughout this paper. In section 3, I will build anaccounting model which will be an essential tool in database integration throughout this thesis. In section4, 1 will raise various issues regarding financial database integration and present methods to solve the issuesstep by step. All of the issues will be resolved based on the accounting model and other tables. Theseissues include both schema and instance value level conflicts. In section 5, based on the previous workdone in section 3 and 4, I will analyze the relative profitability of a specific company. In the process ofthis analysis, I will raise another important issue which is related to the usefulness of the integrated

-6-

information. Finally, in section 6, 1 will conclude this thesis and also comment on the issues which stillremain to be resolved.

2. Basic Framework

2.1. Underlying Scenario

I will assume that the company which requested me to do this project is the Ford Motor Companyand that it is especially interested in its relative profitability performance compared to other foreigncompetitors such as Honda and Volvo. That is, the company is interested in a comparative analysis ratherthan a historical (time-series) analysis of its financial position.

2-2. Employed Accounting Techniques

2-2-1. Financial Statement Analysis

The most widely distributed sources of information of all firms in any industry are the set offinancial statements such as the balance sheet, income statement and cash flow statement. Therefore, itwould make sense to utilize such information as a starting point when analyzing the financial status ofcompanies. A well-known technique of performing this analysis is FSA (Financial Statement Analysis)[4]. FSA includes the study of relationships within a set of financial statements at a point in time and withtrends in these relationships over time. There are two representative FSA techniques. One is the cross-sectional analysis and the other is the time-series analysis. Because I will compare the Ford MotorCompany's most recent profitability performance to that of Honda and Volkswagen, I will employ thecross-sectional analysis technique in this thesis.

2-2-2. Financial Ratio Analysis

There are a variety of techniques for cross sectional analysis. In this thesis, the 'financial ratioanalysis' technique will be used based on the following reasons:

(1) It is the most widely used technique in the real world. In order to make my model more applicableto real world situations, I chose the most extensively used technique.

(2) It is able to control for the effect of size differences across firms or over time.(3) It is able to control for the effect of currency differences across firms. Because the figures in the

fimancial statements for each company are expressed in different currencies, an analysis techniquewhich uses absolute figures would raise complex issues in the standardization process.

2-2-3. Profitability Analysis

There are various financial ratios, each of which is associated with a specific aspect of the financialperformance of companies. Of these ratios, I will mainly focus on profitability ratios according to thescenario of this thesis (Section 2-1).

The most widely-used profitability ratios are ROS (Return On Sales), ROE (Return On Equity)and ROA (Return On Asset). These popular profitability ratios will be adopted in this thesis as the maincriteria in analyzing the competitive position of the Ford Motor Company.

2-3. Overview of Framework

The whole framework largely consists of two parts: database integration and profitability analysisbased on the integrated database. As shown in figure 1, database integration is divided into severalprocedures, with each procedure affiliated with databases, reference tables and most importantly, theaccounting model which will be described in the next section (section 3).At the first step, according to the scenario, the user of my model decides on the competitors against whichit wants to do the profitability analysis. The user also determines the financial aspect on which it wants tofocus particular attention, such as profitability, liquidity and etc. With each type of financial aspect,various criteria are associated by which to evaluate the specific performance of the company compared tothat of other selected competitors. These criteria are financial ratios. Therefore, in this step, my model

-7-

Figure 1. Basic Framework

Standardizatio&Aggregation

(Step 3)

ReconciliationAt InstanceValue Level

(Step 5)

-8-

requires tables which link various financial aspects to the associated ratios and formulas to calculate theratios. For example, if the user is interested in analyzing profitability, profitability ratios will be selectedfrom criteria tables with formulas.

At step 2, based on the user input from step 1, the financial statements of the selected companieswill be searched and if found from each database, retrieved. Because I assumed that it has already beencompletely solved, I will not discuss the physical connectivity issue.

At step 3, because different accounting terms are used in each database and in some cases, themeaning of the terms in each database can be translated differently, standardization of accounting terms willbe performed based on the standardization table. In addition, according to the desired aggregation level, theentities in the model which will be ignored will be decided.

At step 4, because not only different terms but also different structures and formats are used inbuilding financial statements for some databases, restructuring of incompatible financial statements will beperformed based on the fundamental identity of the model.

At step 5, the values for each entity in the model will be decided and at the same time, dataconflicts at the instance value level will be resolved by the use of the rules and the accounting knowledgeembedded in the model.

Finally, based on the complete value for each entity in the model, financial statements for eachcompany will be provided.

Based on the complete version of financial statements for each company and the formulas for eachfinancial ratio in the criteria table, the necessary financial ratios will be calculated. The data for thesefinancial ratios will become the input for the Ford Motor Company's competitive analysis.

Most of the above-mentioned procedures in database integration will be based on the accountingmodel and the algorithms for using the model, which will be developed in the next section.

3. Accounting Model-Based Approach

3-1. Purpose of Model

The accounting model which will be described in this section will be used as a canonical structureon which all of the procedures involved in the database integration will be based.

The model is built so that it can generally apply to any financial accounting database. That is,because this model is built from general accounting knowledge and convention, it applies to the integrationof not only the three databases used in this thesis, but also the other financial databases.

3-2. Structure Of Model

The accounting model is presented in Figures 2 to 5. In this section, the components and thebasic structure of the model will be described.

3-2-1. Fundamental Relationship

One of the most fundamental conventions (relationships) in accounting is the identity, "TotalAssets" = "Total Liabilities" + "Shareholders' Equity". Although it is not explicitly presented in themodel, this identity is slightly modified and used as the underlying linkage which connects all the highestlevel entities in the structure of the accounting model. Figures 2 to 5 present the structure of the model. .

The actual identity used in the model is "Total Assets" = "Total Liabilities" + "Shareholders'Equity" + "Minority Interest". The difference between the generally used identity and the identity used inthe model is that while in usual cases, 'Minority Interest' is included in either "Total Liabilities" or"Shareholder' Equity" for the convenience of categorization, I intentionally separated them. The reason forthis is because in terms of the characteristics of the "Minority Interest", it can not belong to either of theother two accounts. Otherwise, due to the unclear definitions of "Total Liabilities" and "Shareholders'Equity", there would be some difficulties in applying the model to the database integration.

-9 -

FIGURE 2: MODEL I

PREPAID MARKETABLEEXPENSE(+) SECURITIES(+)

OTHERNON-CURRENTASSETS(+)

NET FIXED ASSETS(+)

MERCHANDISE STOCK-IN RAW FINISHEDINVENTORY(+) PROCESS(+) MATERIAL GOODS GROSS FIXED

(+) (+)ASSETS (+)

A/R: ACCOUNT RECEIVABLEN/R: NOTE RECEIVABLE

ACCUMULATEDDEPRECIATION

1(-) ATO

FIGURE 3: MODEL II

LONG-OTHERTERM NON-CURRENTDEBT(+) LIABILITES

CAPITALIZED MORTGAGE BONDLEASE PAYABLE PAYABLE

A/P: ACCOUNT PAYABLEN/P: NOTE PAYABLE

- 11 -

FIGURE 4: MODEL III

PREFERRED COMMONST1CK(+) STOCK(+)

ADDITIONAL RETAINEDPAID-IN EARNINGSCAPITAL(+)

OPERATING DEPRECIATION NON -INCOME(+) (-) OPERATING

ICOME(+)

INTERESTEXPENSE(-)

NIBE: NET INCOME BEFORE EXTRA-ORDINARY INCOME

NIBT: NET INCOME BEFORE TAX

- 12 -

TREASURYSTOCK(-)

FIGURE 5: MODEL IV

REPAYMENT ISSUANCE

LONG-TERM LONG-TERMDEBT(-) DEBT(+)

(+)

3-2-2. Description of Structure

(1) Hierarchical StructureThe accounting model exploits the hierarchical tree structure in representing the inter-relationships

of accounts. That is, each component which composes an account in any financial statement is placed in alower level of the tree structure.

(2) Parent-Child RelationshipI will call higher level accounts as 'parent' accounts and lower level accounts which belong to the

same parent account as 'child' accounts. Because of the similarity of structures, I adopted this usage ofterms from the generally used terminologies in hierarchical database systems.

In terms of the level of aggregation, as a general rule, the parent account can be said to be moreaggregated and the child account can be said to be less aggregated That is, the child account is the elementwhich composes the parent account. Therefore, while we can attain more detailed information as we movedown the hierarchical structure, we can have access to more aggregated information as we move up.

(3) Root AccountThe model is divided into four different sections. Figures 2 to 5 describe each section of the model

(Models I to IV). Each section consists of one hierarchical structure. The highest level account in eachhierarchical structure will be called the 'root' account. Thus, each section can be said to describe thecomponents of the root account in a hierarchical manner.

(4) EntityEach element in the structure will be called an 'entity'. The entities in the model represent standard

accounts in the financial statements.In the process of integration, each entity will have multiple temporary copies in order to hold the

data from the multiple databases which will be integrated. In the case of the example used in this thesis,the entities will have three copies, one for each database. After the final step of integration, thesetemporary copies will be merged into one so that it will hold one representative data for each account.

3-2-3. Relationship Representation

The essence of the model is that the inter-relationships of the various accounts (entities) which canbe found in the standardized financial statements can be easily identified. These relationships are broadlycategorized into two relationships: explicit relationship and implicit relationship.

(1) Explicit RelationshipThe relationship between the parent entity and the child entity is represented by a arithmetic sign

in parentheses, such as (+) or (-). For example, from the accounting model, it can be found that the explicitrelationship of "Net Fixed Assets", "Gross Fixed Assets", and "Accumulated Depreciation" is "Net FixedAssets" = "Gross Fixed Assets" - "Accumulated Depreciation".

(2) Implicit RelationshipIn addition to the explicit relationship, there is another kind of relationship which is not explicitly

represented in the model but can be identified with the help of general accounting knowledge. For example,in addition to the relationship of "Net Fixed Assets" = "Gross Fixed Assets" - "Accumulated Depreciation",there is another relationship which we should pay attention to, that is, the relationship in which "Net FixedAssets" should be less than "Gross Fixed Assets". This relationship is based on the supposition that aslong as a firm has fixed assets, its "Gross Fixed Assets" and "Accumulated Depreciation" will have positivevalue and its "Accumulated Depreciation" will not exceed "Gross Fixed Assets".

3-2-4. Linkage of Financial Statements

The model was developed so that it could accommodate accounts from all three fundamentalfinancial statements, such as the income statement, cashflow statement and balance sheet. However, thisdoes not mean that each financial statement is described in separate sections of the model. As for theincome statement and the balance sheet, these two financial statements are linked together so that the "NetIncome", the highest level parent entity in the income statement, belongs to the "Retained Earnings" in the

-14-

balance sheet, as presented in Figure 4. This comes from the relationship of "Retained Earnings" ="Retained Earnings at Beginning" + "Net Income" -"Dividend".

As for the cash flow statement, because it is different from other financial statements in that it isderived from two other financial statements and instead of the final value at the end of the accounting period,it needs the amount of the change of each account during an accounting period, it is described separately.However, according to the characteristics of the cash flow statement that is derived from the other twofinancial statements, it is basically linked to both the income statement and the balance sheet.

In Figures 6 to 7, the accounting model is expressed in the standard format for the financialstatements. These two figures explain how each entity in the accounting model is positioned and how theyare related to each other in the standard financial statements,thus describing the linkage between theaccounting model and the financial statements.

Figure 6

Standard Format for Income Statement & Cashflow Statement

Income Statement

N1. Net SalesN2. Cost Of Goods Sold

N3. Gross Profit (NI-N2)

N4. R&D ExpenseN5. Selling & Administration

N6. Operating Income(N3-N4-N5)

N7. DepreciationN8. Non-Operating IncomeN9. Interest Expense

N10. Net Income Before Tax(NIBT)(N6-N7+N8-N9)

N1l. Tax ExpenseN12. Minority InterestN13. Other Income

N14. Net Income Before ExtraordinaryIncome (NIBE) (N10-N11-N12+N13)

N15. Extraordinary Income

Cashflow

Cl.C2.C3.C4.1C5.

Statement

Net income (N16)Deferred Tax (L10)Depreciation Expense (N7)Change In Working CapitalOther Cashflow From Operation

C6. Cash Flow From Operation(Cl+C2+C3+(-)C4+C5)

C7. Acquisition Of Fixed AssetsC8. Disposal Of Fixed Assets09. Other Capital Expenditure

C10. Cash Flow From Investment(-C7+C8-C9)

Cl1.012.013.C14.C15.

Net Increase in Short-Term DebtInsuance of Common StockIncrease In Treasury StockRepayment Of Long-Term DebtIssuance of Long-Term Debt

016. Cash Flow From Finance(Cl1+C12-C13-014+C1 5)

017. Total Cash Flow (C6+C10+C16)

N16. Net income (N14+N15)

- 15 -

Figure 7

Standard Format for Balance Sheet

Al. CashA2. Marketable SecuritiesA3. Account ReceivableA4. Note ReceivableA5. Inventory (A5.l+A5.2+A5.3+A5.4)

A5.1 Merchandise InventoryA5.2 Stock In ProgressA5.3 Raw MaterialA5.4 Finished Goods

A6. Interest ReceivableA7. SuppliesA8. Prepaid ExpenseA9. Other Current Assets

A10. Total Current Assets(A1+A2+A3+A4+A5+A6+A7+A8+A9)

Al1.A12.A13.

Gross Fixed AssetsAccumulated DepreciationNet Fixed Assets (All-A12)

A14. Investment & Advancesto Subsidiaries

A15.A16.A17.

Deferred ChargesIntangible AssetsOther Non-Current Assets

A18. Total Non-Current Assets(A13+Al4+AI5+A16+A17)

A19. Total Assets (A10+A18)

Fundamental Identity: Al9-L14+M1+E6

Li. Account PayableL2. Note PayableL3. Tax PayableL4. Interest PayableL5. Accrued ExpensesL6. AdvancesL7. Other Current Liabilities

L8. Total Current Liabilities(LI +L2+L3+L4+L5+L6+L7)

L9. Long-Term Debt (L9.1+L9.2+L9.3)L9.1. Mortgage PayableL9.2 Bond PayableL9.3 Capitalized Lease

L10. Deferred TaxL1I. Deferred LiabilitiesLI 2. Other Non-Current Liabilities

L13. Total Non-Current Liabilities(L9+L1 0+L 1 +L1 2)

Li 4. Total Liabilities (L8+Ll3)

M1. Minority Interest

El. Preferred StockE2. Common StockE3. Additional Paid-in CapitalE4. Treasury StockE5. Retained Earnings (E5.1 +E5.2-E5.3)

E5.1. Retained Earning at BeginningE5.2. Net Income (N 16)E5.3. Dividend

E6. Total Shareholders' Equity(El +E2+E3-E4+E5)

- 16-

Balance Sheet

3-3. Implications of Model

The model will be a basis on which the multiple databases will be integrated. In this section, howthis can be accomplished will be briefly described following the integration steps shown in Figure 1.Detailed description will be done in the next section when I explain the database integration.

(1) StandardizationIn order to standardize different accounting terms used in multiple databases, we need matching

tables by which we can map each different term into one standard term. This standard table can be builtfrom this accounting model because all of the entities which form the hierarchical structure of the model areexpressed in the standard accounting terms (although in some cases, for the convenience of presentation, Iused acronyms such as NIBT for "Net Income Before Tax" and NIBE for "Net Income Before ExtraordinaryItems" in Figure 5).

In addition, because this model is complete in the sense that almost every item which can beshown in any annual report is included and that it is built from general accounting conventions that are freeof any bias toward specific financial databases, we can easily identify information which is missing fromeach databae during the process of standardization.

(2) AggregationBecause a parent account is the aggregation of the child accounts which belong to it, the issue of

deciding the level of aggregation is the same as deciding the level of hierarchy in the model.

(3) RestructuringThe hierarchical structure in the model already represents the standard structure in the conventional

financial statements. Therefore, the restructuring should be performed so that the structure of each financialstatement should be consistent with that of the model.

(4) Reconciliation of Value Level ConflictsThis is an issue related to the problem of deciding the reliability of the data from each database.

Although we should judge reliability by using various sources, the relationships of entities in the model,whether they are implicit or explicit, are the most useful sources for objective judgement.

3.4. General Algorithm for Using Model

3-4-1. Explanation of Search Algorithm

In order to efficiently use the model in the database integration, we need a general algorithm fornavigating and searching for a specific entity in the model. The algorithm which will be explained in thissection is based on the assumption that the accounting terms are already standardized, that is, the argumentswhich are passed to this model are the standard accounting terms used in the model. While the algorithmsfor the specific process used in each stage of integration will be explained in section 4, the algorithmsexplained in this section will be a basic tool by which to describe each database integration process. Thebasic algorithm used in the search process of the model is explained below.

(1) From Top To BottomWhen a sequential search for a specific account is performed, the search will be initially started

from the root entity and go on to the next level (child account).

(2) From Left To RightWith entities that are at the same level in the hierarchy, the search will be performed from the left

to the right.

According to the above algorithm, if we want to get the account 'Inventory', we have to first access'Total Assets', the root entity, and then reach the 'Inventory' account by the following sequence: "TotalCurrent Assets" -> "A/R" -> "Inventory".

- 17-

3-4-2. InstructionsThe instructions employed in this thesis in order to exploit the above-mentioned algorithm are as

follows:

(1) GET (G)The usual instruction for accessing an entity and obtaining the value for the entity is 'GET. For

instance, in order to access "inventory", we have to issue the following instruction: G Inventory.

(2) GET PARENT (GP)In addition to the sequential search which starts from the top level and moves down to lower

levels, in some cases, we need to access the parent entity to which the entity belongs. The instructionwhich enables this operation is 'GET PARENT.

(3) GET NEXT WITHIN PARENT (GNP)If we want to know the values for the entities which belong to the same parent, we must use

another instruction because the 'GET instruction will continue to search until the bottom of the hierarchyis reached. The instruction which limits the search to the accounts which belong to the same parent is'GET NEXT WITHIN PARENT. For instance, if we want to access all of the entities which belong to'Inventory', we first have to issue the instruction 'G Inventory' so that we set the parent entity and thenissue the instruction 'GNP' until we encounter the message which says that no more entities are found.

3-5. Features Of Model

Before moving on to the next section, I will comment on the features of the model in order tosummarize and reemphasize the beneficial aspects of the model.

(1) Identification of Associated AccountsThis model exploits the hierarchical tree structure in representing the inter-relationships among the

various accounts. Because every account which composes the financial statements is represented by theparent-child relationship, whenever we encounter a situation in which we want to find the associatedaccounts by using the the algorithm explained in the previous section, we can easily attain this goal.

(2) Relationship RepresentationWhen we find the associated accounts, because the relationship between the parent and the child is

represented by an arithmetic sign, it is also easy to define the inter-relationships among the associateditems. By exploiting explicit relationships, we can also identify implicit relationships. Both relationshipswill prove to be useful in resolving the value level conflicts.

(5) Variety of UseAs I mentioned in section 3-3, the model is useful throughout all the processes of database

integration.

(6) AggregationThe level of aggregation can be different depending on the users' requirements. Because the model

is designed so that it can accommodate all of the accounts in the standard table (Appendix A), a very lowlevel of aggregation was used in the lowest level of the hierarchical structure. However, this does not meanthat the model can not be easily utilized when users require a high level of aggregation. Because thehierarchical tree structure already accommodate the concept of aggregation, (that is, the parent entity is theaggregation of the child entities), the level of aggregation does not affect the usefulness of the model. Thatis, if the user requires a high level of aggregation, we would merely ignore the entities at the lower level ofthe structure.

- 18-

4. Database Integration

In this section of my study, according to the framework and the accounting model I mentioned insections 2 & 3, conceptual integration of multiple financial databases will be performed. A number ofcritical issues regarding the integration will be raised through examples from databases. Possibleapproaches in addressing these issues will also be presented.

I will take the financial statements for Volvo as a main example of integrating databases becauseall three databases provide financial statements for that company and I will thus be able to easily contrastthe differences. The process of integration for the financial statements of the other two companies will notbe shown. Because the process employed in integrating the financial statements for Volvo can also beapplied to the other two companies, only the final result of the integration process will be presented.

4-1. Standardization & Aggregation

4-1-1. Issues

(1) Different Accounting TermsThere are a number of examples in which different accounting terms are used to represent the same

concept. For example, in order to represent income tax, different terms such as "Total Taxation" inDataline, "Total Taxes" in Disclosure II, and "Provision for Incom-" in LotusOne are used. For the purposeof illustration, a few of these examples are presented in Figure 8.

Figure 8

EXAMPLES OF DIFFERENT NAMING CONVENTIONS(FROM 1988 VOLVO FINANCIAL STATEMENTS)

DATrA LotusOne Disclosure i Pataline15610 Net Prop, Plant & Equip Net Plant Total Net Fixed Asset

14608 Investment & Advances to Inv & Adv to Subs InvestmentSubsidiaries

6758 Long-Term Debt Long-Term Debt Loan Capital

14834 Shareholders' Equity Total Equity Capital and Reserves

96639 Net Sales Net Sales Sales

1961 Interest Expense Total Interest Misc. Interest

2500 Provision for Income Tax Total Taxes Taxation

3329 NI Before Extraordinary Net Income Before Ext Earned for OrdinaryrIncome

Unit Hl1: mII onsa

-19-

(2) Same Terms for Different ConceptsIn some cases, the same terms are used to represent similar but different concepts. For instance,

while in Dataline, the term "Cash + Equivalents" is used to represent what is coined as "Cash" inLotusOne, the same term "Cash & Equivalents" in Disclosure H is used to include the "Cash" and"Marketable Securities" of LotusOne.

(3) Data IncompletenessSome databases do not contain all the accounts which are provided by other databases. For

example, LotusOne and Disclosure II contain accounts such R&D expenses and Selling & AdministrationExpenses, while Dataline does not. There are also cases in which although the database may have a specificaccount, it has no data for it. For instance, although all three databases have an item for "AccumulatedDepreciation", while Dataline provides data for it, LotusOne and Disclosure H do not.

(4) Different Levels Of AggregationEven in the case in which all three databases do provide data for an account, the level of

aggregation may be different depending on the database. For example, while LotusOne and Disclosureprovide aggregated data for total gross fixed assets, Dataline provides data for each item which composesgross fixed assets, such as land, buildings, plants and machinery.

4-1-2. Approach

4-1-2-1. Standardization

(1) General ExplanationThe above-mentioned issues will mostly be resolved by the process of standardization. By using a

standardization table (See Appendix A) and the accounting model, all of the different naming conventionswill be standrdized and transformed into generally used standard accounting terms. The standardiztion tablewill be used as an intermediary between the accounting model and each database so that the table can matchthe entities in the model with the accounting terms used in each database.

The issue of using the same terms for different usages, as in the case of "Cash + Equivalents", willbe partly resolved in the sense that they will be identified and matched with equivalent standard terms.Complete resolution of this issue will be performed in the aggregation step.

As for the issue of data incompleteness, standard terms which have no equivalent accounts or datawill be labeled 'NA(Not Available)'.

(2) ProcessDetailed process of how this step can be performed is explained below.

a. Get account terms from each databaseb. Search for matching standard terms in the accounting model by using the matching table

(standardization table).c. When found, enter the value from the database under investigation into the temporary copy of the

matching entity in the model.d. If the database provides data for the parent entity, but not for the child entities due to the different

levels of aggregation, enter 'N/A' into the temporary copy of the child entities in the model.e. If the account does not match any entities employed in the model, but the parent entity can be

identified, enter a question mark. For example, in the case of "Debtors" from Dataline, from thestandardization table, we can recognize that this account is the aggregation of "Account Receivables"and "Note Receivables" and thus belongs to the parent entity "Current Assets". However, we cannot specify the exact matching level of the account in the hierarchical structure of the model.Therefore, this account is marked with'?'.

f. The rest of the entities which do not have any matching accounts from any databases will be filledwith 'N/A' in the model. This phenomenon will happen due to the fact that the model has a moredetailed level of aggregation than the actual databases under investigation.

The intermediate result after going through this step is presented in Appendix B ( For theconvenience of presentation, this intermediary result is presented in the table format, not the format ofthe model.).

-20-

4-1-2-2. Aggregation

(1) General ExplanationAs shown in the result of the previous step, due to the different levels of aggregation and the data

incompleteness of each databas, we can not directly compare the values from each database. Therefore, atthis stage, we need to decide on the level of aggregation so that we can make the financial statements fromeach database comparable. In addition, in doing a financial ratio analysis, we do not need information forevery accounting term. That is, if we want to analyze the liquidity status of a company by using 'currentratio, all we need is data for 'total current assets' and'total current liabilities'. We do not need data for everyitem which composes the current assets and current liabilities. Due to this fact, a certain level ofaggregation can also be justified ( The opposite case in which we need data for the conflicting child entitieswill be discussed in the next section).

In this step, by using the concept of aggregation, the issues which have not been completelyaddressed in the previous step will be resolved. In other words, we will ignore the semantic conflicts whichoccur in the lower level of child entities by aggregating associated child entities into one higher level parententity. For example, by aggregating all the current assets into one entity called "Total Current Assets", asignificant portion of the remaining issues will be solved as far as the figures for the aggregated termscoincide. However, depending on the level of aggregation, some accounts may still contain 'NA'. This isinevitable in the sense that the level of aggregation can be different depending on the users' requirements.Therefore, the implemented version of the model should be flexible so that it can reflect the users' needs. Inthis thesis, a relatively higher level of aggregation is used in order not only to facilitate understanding of theprocess, but also to make it fit into the profitability analysis framework. The result of this aggregationwill be shown in the next section with the result of restructuring.

(2) Processa. Get the account with ?' from each database.b. By using instructions such as 'GNP' (GET NEXT within PARENT) and 'GP' (GET PARENT),

identify the parent account and the child accounts which should be aggregated together.c. Aggregate the child accounts into the parent account.

4-1-2-3. Disaggregation

In the previous discussion, I assumed that we do not need the data for the child entities in the laterfinancial ratio analysis. However, depending on the users' requirements, in some cases, we have to obtaindata for the conflicting child entities. For example, as for the "Accounting Receivable", because Datalinedoes not provide the data for "Accounting Receivable" but does provide the sum of the "AccountingReceivable" and the "Note Receivable" under the name of "Debtors", if we do not need data for each entityin doing a ratio analysis, we can proceed with the integration process by aggregation. However, if we doneed them, for instance, if we have to calculate the account receivable turn over ratio, we can not ignore thedata for these entities. Therefore, the above-mentioned aggregation method can not be applied to this case.Instead, we should enter 'N/A' into the temporary copies of these entities so that we can resolve theseconflicts at a later part of the integration process. This process will be explained when we discuss theprocess of deciding values for each entities in the model (section 3-3). However, at this stage, at least thefollowing processes should be completed.

a. The account "Debtors" in Dataline will be disaggregated into two entities, "Account Receivables" and"Now Receivables", but the value for "Debtors" will be kept in the model for future verification indeciding instance values.

b. Entities such as "Account Receivables" and "Note Receivables" in the model for Dataline will befilled with 'N/A' in the model.

c. Temporary copies of these entities for the other two databases will be filled with the numbers fromthe databases.

As I previously mentioned, since the level of aggregation depends on the users' requirements, theissue of which of the two techniques, aggregation or disaggregation, will be selected should be decidedtaking into consideration the users' requirements.

- 21 -

4-2. Restructuring

4.2-1. Issues

Although standardization of accounting terms and a certain level of aggregation has beenperformed, because each database has its own standardized format and structure, there still remains an issueregarding the incompatibility of the structure and the format used in the financial statement from eachdatabase. This issue is also related to the accounting conventions. In Figure 9 the accounting model-basedbalance sheet is contrasted with the structure for Dataline's balance sheet. As you can see in that figure,Dataline uses different arrangements of each accounting term in presenting balance sheet information. Forexample, asset accounts are structured to exclude the portion of current liabilities from total assets. Thisincompatibility of structure will make it difficult even for a human being to handle information fromseveral databases

4-2-2. Approach: Restructuring

4-2.2-1. General Explanation

In this step, the conflicts at the root level will be resolved by the use of the fundamental identity.In this sense, this step can be said to be a preparation step for Reconciliation of Conflicts at Instance ValueLevel. which will be explained in the next section.

The major inputs to this step are the predefined format for each financial statement and theaccounting model. While the accounting model is used to resolve the structural conflicts of each financialstatement, the predefined format is used to produce the standard reporting structure for each financialstatement (See Figure 10).

One good example of root level conflicts is Dataline's reporting structure. That is, Dataline uses adifferent structure in the building balance sheet. The "Total Assets" account in Dataline is the net totalassets which is equal to total assets - total current liabilities. This incompatible structure can be identifiedby the use of fundamental equation of the model because in Dataline, "Total Assets" is not equal to the sumof "Total Liabilities" and "Shareholders' Equity"

4-2-2-2. Process

As I mentioned in the previous section, major inputs to this process are a predefined structure foreach financial statement and the accounting model. The accounting model provides the data for eachtemporary copy of entity and accounting knowledge which is represented by the embedded relationships.The predefined structure (See Figure 9) just provides generally used reporting format for each financialstatement. The basic process for restructuring is explained below.

(1) Get the root entity of each section of the model(2) Verify that the fundamental identity is satisfied for each copy of the root entity.(3) If it is satisfied, match each entity in the model with each account in the predefined format and enter

the value for each copy of entities into the format.(4) If it is not satisfied, investigate the entities in the first hierarchical level of the model so that the

missing account can be found.(5) If the missing account is found, enter the difference between "Total Assets" and the sum of "Total

Liabilities","Shareholders' Equity" and "Minority Interest" into the missing account. Then start thematching process.

Figure 10 shows the result of restructuring as well as aggregation for the financial statements forVolvo.

-22-

FIGURE 9Sample Comparison of Balance Sheet Structure

Standard Format

Assets Liabilities & Shareholders'Equity

Total Current Assets

Gross Fixed AssetsAccumulated DepreciationNet Fixed Assets

Investments & Advancesto Subsidiaries

Intangible AssetsOther Non-Current Assets

Total Non-Current Assets

Total Assets

Total Current Liabilities

Long-Term Debt

Deferred LiabilitiesOther Non-Current Liabilities

Total Non-Current Liabilities

Total Liabilities

Minority Interest

Shareholders' Equity

Total Liabilities & Shareholders' Equ

Dataline's Format

Assets

Gross Fixed AssetsAccumulated DepreciationNet Fixed AssetsIntangiblesInvestments & Advancesto SubsidiariesOther AssetsTotal Current Assets(Total Current Liabilities)

Total Assets

Liabilites & Shareholders'Equity

Shareholders' EquityDeferred LiabilitiesMinority InterestLong-Term Liabilities

Total

-23-

Figure 10

Comparison of Standardized Financial Statements for Volvo (1988)

Balance Shet LotusOne Disclosure Il Dataline

Total Current Assets 48978000 48.98 48978Gross Fixed Assets 15610000 15.61 30236Accumulated Depreciation NA NA 14626Net Fixed Assets 15610000 15.61 15610

Investment & Advances toSubsidiaries 14068000 14.07 14608

intangible Assets 297000 0.3 297Other Non-Current Assets 7998000 8 7998Total Non-Current Assets NA NA NA

Total Assets 86951000 86.95 86951

Liabilities & Shareholders' Equity

Total Current Liabilities 34500000 34.5 34500Long-Term Debt 6758000 6.76 6758Deferred Liabilities NA NA 30375Other Non-Current Liabilities 30375000 3038 NATotal Non-Current Liabilities NA. NA NA

Total Liabilities 71633000 71.63 71633

Minority interest 484000 0.48 484Shareholders' Equity 14834000 14.83 14834

Total 86951000 86.95 86951

income Statement

Net Sales 96639000 96.64 96639Cost of Goods Sold 77110000 77.11 NAGross Profit 19529000 19.53 7186R&D Expenses NA NA NASelling & Administration 10028000 10.03 NA

Operating Income 9501000 9.5 NA

Depreciation 2293000 2.29 2293Non-Operating Income 685000 0.69 NAInterest Expense 1961000 1.96 1961Net Income Before Tax 5932000 5.93 5932Tax Expense 2500000 2.5 2500Minority Interest 103000 0.1 103Other Income N/A N/A N/A

Net Income BeforeExtraordinary items 3329000 3.33 3329

Extraordinary Items NA NA NANet Income 33290009 NA 3329

-24-

4-3. Reconciliation Of Conflicts At Instance Value LevelAt this stage, the value for each entity(account) will be decided and thus multiple copies of each

entity will be merged into one.

4-3-1. Issues

4-3-1-1. Different Units

As shown in Figure 10, the three databases use different units in representing values for eachaccount. Due to this difference, the values for the same account appear to be different. For example, incase of "Intangible Assets", the three databases provide seem to provide conflicting values for this account.

However, these values are essentially the same ( All the data from Disclosure II is rounded up). Therefore,before moving on to the next step, the units should be standardized so that the instance values from eachdatabase can be compared. The standard unit for the financial statements for Volvo is decided to be'millions' in this section.

4-3-1-2. Conflicts At Instance Value Level

The conflicts at instance value level indicate all the cases in which we have to decide on onerepresentative value for a certain account or entity (in the model). These cases are divided into two: thecases in which databases provide inconsistent data for the same entities and the cases in which entity valuesfor certain databases are not available.

At this point, we have to deal with a judgement problem. That is, we have to decide whichdatabase is providing more accurate information for a certain account. For example, as you can see inFigure 10, the data for gross fixed assets and gross profit from LotusOne and Disclosure is not consistentwith the data from Dataline. If we were to assume that, in compliance with the majority rule, the data fromDisclosure II and LotusOne should be used, it would be always be easy to handle this kind of problem.However, this is not always the case. In many cases, when we encounter the value level inconsistencies,we should use more sophisticated rules other than in order to make an objective judgement on the reliabilityof the data. More detailed discussion will be done in the following sections.

4-3-2. Approach: Model-Based Judgement

4-3-2-1. General Explanation

In resolving the conflicts at instance value level, we need objective criteria and rules by which toevaluate the reliability of the data from each database. Because we are dealing with financial accountingdatabases, in order to set up the criteria and rules, it is evident that we need accounting knowledge.

The accounting model which I explained in section 3 is built based on conventional accountingknowledge and represents the knowledge through the explicit and implicit relationships of the accounts.Therefore, the model will be a good tool by which we can introduce the accounting knowledge into theprocess of reconciling the conflicts at the instance value level. In addition to the accounting model, rules bywhich to facilitate the use of the accounting model will be developed.

In this part, I will take some examples of value level conflicts and go through the process ofresolving the conflicts with these examples.

One of the accounts in which conflicts at instance value level can be found is 'Gross Fixed Assets'(See Figure 10). As a first step, we should look at the accounts which are associated with 'Gross FixedAssets' in the hierarchical structure, such as "Accumulated Depreciation" and 'Net Fixed Assets". From theaccounting model (Figure 2), we can find the relationship of "Net Fixed Assets" = "Gross Fixed Assets" -"Accumulated Depreciation". From this relationship, we can infer which data is more reliable.

In the case of LotusOne and Disclosure II, they do not provide data for "Accumulated Depreciation"and contain the same number for both "Gross Fixed Assets" and 'Net Fixed Assets'. This does not satisfythe implicit relationship in which 'Gross Fixed Assets' should be less than "Net Fixed Assets". In the caseof Dataline, it is not only providing data for all of three accounts but also providing consistent valueswhich satisfy the relationship. From this fact, we can infer that Dataline is providing more accurate data for"Gross Fixed Assets" and "Accumulated Depreciation".

-25 -

As for "Gross Profit", by going through a similar process, we can come to the conclusion that thedata for "Gross profit" from Dataline is less reliable than that of the other two databases because of thefollowing reasons:

(1) The items which are associated with "Gross Profit" are "Cost of Goods Sold" and "Net Sales" (SeeFigure 4). However, because Dataline does not provide any data for "Cost of Goods Sold" which isrequired to calculate "Gross Profit", we can not verify the figure for "Gross Profit" from Dateline.

(2) In this case, we can also apply the majority rule in deciding which data is more reliable. That is,two of the three databases provide the same figure for the "Gross Profit" account.

(3) The two databases, LotusOne and Disclosure II, provide data for both "Cost of Goods Sold" and "NetSales" and the data for "Gross Profit" is consistent with the explicit relationship of "Gross Profit"="Net Sales" - "Cost Of Goods Sold".

4-3-2-2. Development Of Rules

From the above discussion, I can make one conclusion. That is, we can not say that one databaseis always more reliable than another. Everytime we encounter value level inconsistencies, we should inferaccuracy case by case with the help of accounting knowledge and the following rules.

(1) By using the account model, find the entities which are associated with the entity which hasconflicting values.

(2) Find the explicit relationship which links the associated entities to the entity in question.(3) Verify the values from each database by using the relationship. In doing so, pay attention to the

implicit relationships as well as the explicit relationships.(4) If the values from certain databases do not satisfy the relationship, discard them.(5) If some databases provide all associated items and the others do not, the data from the former can be

said to be more reliable because we can at least verify the reliability of the data by utilizing therelationship represented in the model.

(6) If no associated item or relationship can be found, or the inconsistencies can not be reconciledthrough the above-mentioned steps, apply the majority rule. This situation can happen when theaccount which has conflicting values is at the lowest level of the structures and when the accounthas no more child accounts below it.

4-3-2-4. Process

In this section, the process of deciding the value for each entity in the model will be explained.This process is based on the aggregation level which was decided in section 4-1 and will start from the rootentity of the first part of the model, "Total Assets" and move on to "Total Liabilities" and "TotalShareholders' Equity". The process within each structure is explained below.

a. GET entityb. Compare the value for each copy of entity.c. If the values for all the copies are the same, merge the multiple copies into one with the value andGET next entity.d. If there are conflicts of value, invoke the subroutines which employ the rules mentioned in theprevious section.e. After the conflicts are resolved, GET the next entity.

4-3-3. Comments

These rules can be successfully applied to all of the data inconsistencies at instance value level inthe process of integrating the three databases. However, as more databases are added to the integration andthe content of the information of each database becomes more detailed, more sophisticated rules may need tobe developed.

-26-

4-4.Other Issue: Currency Difference

So far, I have discussed most of the issues involved in the conceptual integration of the financialdatabases and by providing a specific example with Volvo, explained the approaches to address those issues.These approaches can also be applied to other companies such as Ford or Honda with less difficulty becauseonly two databases provide financial statements for these two companies. Therefore, in this thesis, I willleave out the process of obtaining the integrated financial statements for the other two companies.However, when we deal with the accounting figures of different companies from different countries, we haveto resolve the currency difference. There are three ways to resolve this difference.

(1) Use of a currency database(2) Use of a common size financial statement(3) Use of financial ratios

(1) Use Of Currency DatabaseThis is the method which was used in Maria Linn Paget's paper 'A Knowledge-Based Approach

Toward Integrating International Online Databases (WP#CIS-89-01) [9], However, since the exchange rateis ever changing, it is very difficult to decide the exchange rate even at a specific point of time. In additionto that, if we use this approach, it is necessary to access another database in integration and decrease theperformance of integration.

(2) Use Of Common Size Financial StatementIn this method, each figure in the financial statements is expressed in relative amounts to "Total

Assets" or "Net Sales". This is one of the cross sectional techniques in analyzing financial statements thatI explained in the previous section. This technique can also be employed in resolving currency differences.However, if this technique is employed, there will one more process needed in order to convert all theabsolute figures to the relative figures.

(3) Use of Financial RatiosIf we use the financial ratios to represent the performances of companies, because the final results

are expressed in ratios instead of absolute amount, we do not have to worry about the currency difference.This is the method adopted in this paper.

4-5. Building a Final Version Of Financial Statements

The final version of each financial statement can be built by using the predefined structure offinancial statements and entity values which have been reconciled throughout the previous steps. Nochanges or reconciliation is not made in this step. This step is only to build standard financial statementfor each company based on completed results from previous steps. All that should be done is to enter thevalue for each entity into the account in the standard financial statement (Figure 9). The sample balancesheets and income statements for all three companies are presented in Figure 11- 13..

4-6. Comments On Cash Flow Statement

The cashflow statement is different from other financial statements in that it can be derived fromother financial statements and needs two period values for some accounts. In addition, none of the threedatabases provide the cash flow statements. Therefore, in deciding the value for each entity of the cash flowstatement, instead of comparing the value from each database, we should directly calculate it by using therelationships in the model.

However, values for the accounts such as "Acquisition of Fixed Assets" are not available from thebalance sheet and income statement of the computerized financial databases. As I will mention in theconclusion, this lack of detailed information can be one of the critical shortcomings of computerizeddatabases and thus become one of the factors which limit the usefulness of these databases. However, sinceit is not a technical problem, as more detailed information is included in the databases, this problem will beultimately resolved.

-27-

Figure 11

Final Version of 1988 Financial Statements (units: Swedish Kronor, millions)

Balance Sheet

Assets Liabilities & Shareholders'Equity

Total Current AssetsGross Fixed AssetsAccumulated DepreciatiorNet Fixed Assets


Intangible AssetsOther Non-Current AssetsTotal Non-Current Assets

Total Assets

Income Statement

Net SalesCost of Goods SoldGross ProfitR&D ExpensesSelling & Administration

Operating Income

DepreciationNon-Operating IncomeInterest ExpenseNet Income Before Tax

Tax ExpenseMinority InterestOther Income

Net Income BeforeExtraordinary Items

Extraordinary Items

Net Income

48978302361462615610

14608

2977998

37973

86951

966397711019529

NA100280

9501

2293685

19615932

2500103NA

3329

NA

3329


Deferred LiabilitiesOther Non-Current LiabilitiTotal Non-Current Liabiliti

Total Liabilities

Minority InterestShareholders' Equity

Total

The Data for these financial statements were collected from LotusOne, Disclosuland Dataline.

34500

30375NA

37133

71633

48414834

86951

- 28 -

Figure 12Final Versien of 1988 Financial Statements for Ford(units:US$, thousands)Balance SheetAssets Liabilities & Shareholders'

Equity

Total Current AssetsGross Fixed AssetsAccumulated DepreciatiorNet Fixed Assets


11888860015992200

NA15992200

2102700

Intangible Assets NAOther Non-Current Assets 6383000Total Non-Current Assets 24477900

Total Assets 143366500


Long-Term DebtDeferred LiabilitiesOther Non-Current LiabilitiesTotal Non-Current Liabilities

Total Liabilities


Total

40959700

6818740039331008593200

80713700

121673400

21529000

143366500income Statement

Net SalesCost of Goods SoldGross ProfitR&D ExpensesSelling & Administration

Operating Income

Depreciation

Non-Operating incomeInterest ExpenseNet income Before Tax

Tax ExpenseMinority Interest

Other Income

Net Income BeforeExtraordinary Items

Extraordinary Items

Net Income

924456007401730018428300

NA6972500

11455800

3792300

1033000354000

8342500

299870043600

NA

53000200

NA

53000200

The above data was collected from Lotusone and Disclosure 1i

-29-

Figure 13

Final Vislon of 1988 Financial Statements

Balance Sheet

Assets

Total Current AssetsGross Fixed AssetsAccumulated DepreciationNet Fixed Assets


Intangible AssetsOther Non-Current AssetsTotal Non-Current Assets

Total Assets

12691601637345771250866095

117447

031747

1014839

2284449

for Honda(units: Japanese Yen, thousar

Liabilities & Shareholders'Equity


Long-Term DebtDeferred LiabilitiesOther Non-Current AssetsTotal Non-Current Assets

Total Liabilities


Total

Income Statement

Net Sales 3489258Cost of Goods Sold 2544188Gross Profit 945070R&D Expenses 183652Selling & Administration 584360

Operating Income 177058

Depreciation NA

Non-Operating Income 19578Interest Expense 24547Net Income Before Tax 172089

Tax Expense 80559Minority Interest - NA

Other Income ~ 5769

Net income BeforeExtraordinary Items 97299

Extraordinary Items NA

Net Income 97299

The above data was collected from Lotusone, Disclosure 1i and Dataline.

-30-

1047370

30157234049

0945621

1382991

NA901458

2284449

5. Profitability Analysis

In this section, based on the financial statements structured in the previous chapter and thepredefined financial ratios in the criteria table, the relative profitability performance of the Ford MotorCompany will be analyzed.

5-1. Issues

The Net Income' figure in the income statement is used in conventional profitability ratios such asROA, ROS, ROE. However, if this figure is directly used, the outcome may be distorted due to thefollowing reasons:

(1) Different Tax PoliciesThe 'Net Income' figure in the income statement is obtained after deducting the income tax.

Because different tax rates are applied in each country, if we use the 'Net Income' figure in calculating theratios, we would, in reality, be distorting the true profitability of each company.

(2) Extraordinary IncomeThe 'Net Income' figure also includes extraordinary income which does not come from a regular

income source. Therefore, if this income is included, the ratios can not be said to reflect the trueprofitability performance of each company.

(3) Other IncomeThe conventional net income figure includes other sources of income which are not directly related

to the type of business in which the company is involved. The 'Investment Gain' is one example.Although this type of income may reflect the financial capabilities of a company, it is not reasonable toinclude it in calculating the ratios when analyzing a company's competitive position in an industry.

5-2. Calculation of Profitability Ratios

The content of the criteria table for profitability analysis is shown in Table 1. Taking intoaccount the fore-mentioned issues, the 'Net Income Before Tax' figure in the income statement is used inmost formulas. Based on this criteria table and the integrated financial statements for the three companieswhich were made in the previous chapter (See Figure 11 - 13), each profitability ratio will be calculated.Table 2 shows the result of the calculation for each of the three companies.

5-3. Analysis

Among the profitability ratios presented in table 2, Gross Margin, ROE and ROS will be used inthis sample analysis. The main purpose of this analysis is not to present an objective conclusion about thecompetitive position of the Ford Motor Company, but to raise an important issue regarding the financialstatement analysis which uses financial databases rather than to present an objective conclusion about thecompetitive position of the Ford Motor Company.

According to the figures for ROE and ROS, the Ford Motor Company can be said to be veryprofitable. However, of the three ratios, the Gross Margin is the lowest for the Ford Motor Company.Because the 'Gross Margin' is calculated by subtracting the 'Cost Of Goods Sold' from the 'Net Sales', it canbe said that the profit margin of the Ford Motor Company is low due to the high cost of goods sold.

From the above argument, it can be concluded that due to high non-operating income, the FordMotor Company is profitable, but due to the high cost of goods sold, it has a low gross profit margin.

5-4. Comments

The conclusion in the previous section is based on the assumption that all three companies haveused the same accounting principles. That is, the same inventory evaluation method and depreciationmethod is used in the financial statements of all three companies. But what if they use different accountingprinciples? Can we still come to the same conclusion as in 5-3? Because the cost of goods sold andincome before tax depends on the accounting principles adopted in the inventory and depreciation evaluation,

- 31*-

the financial ratios are changed depending on the change in the accounting principles. Since this is one ofthe most critical issues involved in international comparisons of financial ratios and has significantimplications for financial database integration, this issue will be covered in the next chapter.

Table 1. Criteria Table

Area of Interest

Profitability

Ratios

FOS

FCE

ROA

Definition

Income Before Tax /Net Sales

Income Before Tax /Shareholders' Equity

Income Before Tax/Total Assets

Gross Margin Gross Profit / Net Sales

Financial Statements

Income Statement

Income Statement &Balance Sheet

Income Statement &Balance Sheet

Income Statement

- 32-

Table 2

Profitability Ratios For Each Company (1988)

Ratios FOFD HONDA VOLVO

Gross Margin 0.199 0.271 0.202

FCE0.388 0.191 0.4

RO 0.09 0.049 0.061

RQA 0.058 0.075 0.068

6. Conclusion

Until now, I have identified several issues involved in the conceptual integration of financialdatabases and addressed these issues using actual examples. Based on the final version of the financialstatements of each company, financial ratios were calculated. By using the financial ratios, I was able toremove the additional need for the currency database. However, in the process of the financial ratioanalysis, another important issue arose: accounting principle differences among countries. Along withother issues, this issue may impose a limitation on the use of the financial databases.

In this section, I will conclude this thesis by describing the factors which may constrain theusefulness of the integrated financial database and present future possible areas of further research.

6-1. Constraints

6-1-1. Accounting Principles

As I mentioned in section 5-3, in many situations, analysts are concerned with comparing thefinancial statements, especially the financial ratios, of companies from different countries. One of theissues is the difference in the set of accounting principles adopted in each country (Examples of thesedifferences are shown in Appendix C). If our final objective is to provide objective data for a comparativeanalysis of various companies, it is very important to take this issue into account before presenting anintegrated view of dataae. However, computerized financial databases do not include enough informationby which to adjust accounting principle differences. That is, available computer databases typically includeonly a subset of the information in a firm's annual report, interim report or other disclosures (GeorgeFoster, Financial Statement Analysis 2nd ed.)[4]. However, although databases include information aboutunderlying accounting principles, it is not sufficient to fully adjust the differences. For example, whendatabases have a single coding category system for the inventory evaluation, Firm A (100% LIFO), Firm B(51% LIFO, 49% FIFO) and Firm C (34% LIFO, 33% FIFO, 33% average cost) would be coded in thedatabases as LIFO inventory firms because the inventory coding in most databases typically is for only themajor inventory method.(George Foster, Financial Statement Analysis 2nd ed) [4].

However, this is not an issue restricted to computerized databases. Even if all of the publiclyavailable fMancial reports have been obtained, this issue can not be fully addressed. One interesting paperregarding this issue is 'Analyzing Foreign Financial Statements: The Use and Misuse of International RatioAnalysis' by Choi, Hino, Min, Nam, Ujiie, and Stonehill [3]. In their paper, they studied the financialratios of Japanese, Korean, and U.S. firms and identified a listing of potential factors important to eachcategory of financial ratios. However, as George Foster mentioned in his book 'Financial StatementAnalysis' (p191) [4], the task of identifying how many of the financial ratio differences are due to theaccounting principle differences still remains to be solved.

6-1-2. Recentness Of Data

Some data from computerized databases are not up to date. For example, the most recent datawhich can be obtained from all three databases is for the 1988 accounting period. This lack of recentnessmay decrease the usefulness of analysis which uses the computerized databases.

6-1-3. Consolidation

The financial statements from the databases are consolidated financial statements which aggregatedthe financial information of the subsidiaries of each company. Although all of the three companies aremainly engaged in the auto industry, some of their subsidiaries may be involved in other industries, Theperformance of these subsidiaries is included in the consolidated financial statements. However, we can notidentify which portion is from which certain subsidiary in the consolidated financial statements. Therefore,the financial ratios from consolidated financial statements may not be an objective criteria in evaluatingcompetitive positions in specific industries.

6-2. Final Comments

Although these constraints may reduce the usefulness of computerized databases, it does not meanthat the effort to integrate financial databases is useless. As I mentioned in the beginning of this paper,

-33-

with more and more various databases coming into existence, the need for integrated financial databases areever increasing. However, because all of the constraints which were mentioned in the previous section aredue to the lack of information, in order to make the effort for database integration more valuable, theinformation provided by financial databases needs to be more sophisticated and accurate. I believe that, asthe access to computerized databases increases and users of these databases require more precise and detailedinformation, it is inevitable that all the constraints will be finally resolved in the near future and thus allresearch efforts related to the financial database integration will bear fruit.

-34-

APPENDIX A

STANDARDIZATION TABLE

-35-

Sample Standardization Table

General Categorv Lotusone Disclosure i Dataline

1. Balance Sheet

Asset

Total Current Assets Current Assets Current Assets Current Assets

Inventory Inventory Inventory Total Stock & work in -Merchandise Inventory Inventory progressRaw Material Raw Material Stock- Raw Material

Finished Goods Finished Goods Stock -Finished GoodsWork In Progress Work In Progress Work in Progress

Cash Cash Cash + Equivalents

Marketable Securities Marketable Securities Cash & Equivalents Short Term Investment

Account Recievables Receivables Account Receivables

DebtorsNote Receivables Note Receivables

Interest Receivables

Prepaid Expense Other Current Assets & Other Current AssetsPrepaid Expense

Supplies

Other Current Assets

Gross Fixed Assets PropPlant & Equip Gross Plant Gross Fixed AssetLand + BuildingPlant, Machinery,

+Equipment

Accumulated Depreciation Accumulated Depreciation Accumulated Depreciation DepreciationLand + BuildingPlant Machinery,

+Equipment I

Net Fixed Asset Net Prop, Plant & Equip Net Plant Total Net Fixed AssetLand + BuildingPlantMachinery +EquipmentAssets Under Construction

Investment and Advances Investment & Advances to Inv & Adv to Subs InvestmentTo Subsidiaries Subsidiaries Associated Companies

Subsidiary CompaniesInter-Group

Deferred Charges Deferred Charges Deferred Charges

Intangible Assets Intangibles Intangible AssetsOther Non-Current Assets Other Non-Current Assets Other Long-Term Assets

Deposits

Liabilities

Total Current Liabilities Current Liabilities Current Liabilities Current Liabilities

Account Payble Account Payble Account Payable

Creditors + Short TermNote Payble Note Payable Note Payble Borrowings

Tax Payble Income Tax Tax Payable Current Taxation

Abeued Expenses Accrued Expenses Accrued Expenses

Advanceso Oter Current Liabilities Dividends Payable

Other Current Uabilities Current Long-Term Debt Other Current LiabilityCurrent Portion of Capital- Other Current LiabilitiesLeases

Long-Term Debt

Mortgage Payable MortgageBond Payable Long Term Debt Long Term Debt Loan CapitalCapitalized Lease

Deferred Liabilities Deferred Charges Deferred LiabilitiesDeferred Tax Deferred Taxes Deferred TaxOther Deferred - Future Tax

Liabilities & Misc. Deferred Liabilities

Other Long-TermOther Long-Term Liabilities Convertible Debt Liabilities

Non-Current Capital LeasesOther Long-Term Liabilities

Minority Interest Minority Interest Minority Interest Minority Interest

Share Holders' Equity

Preferred Stock Preferred Stock Preferred StockCommon Stock Common Stock common St-Additional Paid-in Capital Capital Surplus Capital and ReservesRetained Earnings Retained Earnings Retained EarningsTreasury Stock Treasury Share Treasury Stock

2. Income Statement

Net Sales Not SalesNotsales Sales

(Or Sales Revenue) Home SalesOverseas Sales

Cost of Goods Sold Cost of Goods Cost of Goods Sold

Gross Profit Gross Profit Trading Profit

Non-Operating Income Non-Operating Income Non-Op Income / Expense Total Other IncomeInterest

Other Income Other Income Other Income Exchange Gains or Losses

Interest Expense Interest Expense Total Interest Short-Term InterestMedium-Term InterstMisc. Interest

Depreciation Expense Depreciation & Amortizati( Depreciation & DepreciationAmortization

Tax Expense Provision for Income Tax Total Taxes TaxationCorporation TaxDeferred Tax

R&D Expenses R&D Expense R&D ExpensesSelling & Administration Selling. General, & Selling & Admin Exp

Administration


Investment Investment Gain/Loss Invest Gain/Loss Assoc. Companies Profit Shan

NI before Extraordinary NI bofore Extraordinary Net Income Before Ext Eamed for OrdinaryItems Items I I

Extraordinary Income Extraordinary Items & Extraordinary Items Exceptional ItemsDiscounts

Net Income Net Income Net Income

APPENDIX B

1NTERMEDIATE RESULT AFTER STANDARDIZATION

-41-

Intermediate Result After Standardization

standard Term Lotusone Disclosure Dpataline

1. Balance Sheet

Asset

Inventory Inventory Inventory InventoryMerchandise Inventory NA NARaw Material Raw Material NA Raw Material

Finished Goods Finished Goods NA Finished GoodsWork In Progress Work In Progress NA Work in Progress

Cash Cash Cash

Marketable Securities Marketable Securities Cash & Equivalents Marketable Securities

Account Reclevables Account Receivables Account Receivables

Note Receivables Note Receivables Note Receivables Debtors(?)

Interest Receivables

Prepaid Expense Other Current Assets & Other Current Assets(?)Prepaid Expense(?) NA

supplies

Other Current Assets

Gross Fixed Assests Gross Fixed Assets Gross Fixed Assets Gross Fixed AssetLand + BuildingPlant, Machinery,

+ Equipnent

Accumulated Depreciation Accumulated Depreciation Accumulated Depreciatior Accumulated DepreciationLand + BuildingPlant, Machinery,

+ Equipment

Net Fixed Asset Net Fixed Assets Net Fixed Assets Net Fixed AssetsLand + BuildingPlantMachinery +EquipmenAssets Under Const

Investment and Advances .investment & Advances to Investment & Advances to Investment & Advances toTo Subsidiaries Subsidiaries Subsidiaries Subsidiaries

Associated CompaniesSubsidiary CompaniesInter-Group

Deferred Charges Deferred Charges Deferred ChargesNA

Intangible Assets Intangibles Intangible AssetsOther Non-Current Assets Other Non-Current Assets Other Non-Current Assets NA

Liabilities

Total Current Liabilities Current Liabilities Current Liabilities Current Liabilities

Account Payble Account Payble Account Payable

Creditors + Short TermNote Payble Note Payable Note Payble Borrowings(?)

Tax Payble Tax Payble Tax Payable Tax Payable

_ccrued Expenses Accrued Expenses Accrued Expenses

Advances NA NA

Other Current Liabilities(?) Other Current LiabilitesOther Current Liabilities Current Long-Term Debt(?) Other Current Liability

Current Portion of Capital-Leases(?)

Lmg Term Debt Long Term DebtMortgg Payable Mortgage PaybleBond Payable Bond PayableCaptaod Lease NA NA N/A

Deferred Liabilities Deferred LiabilitiesDeferred Tax Deferred Charges(?) Deferred Taxes Deferred Tax(?)Other Deferred - Future Tax(?)Liabilities & Misc. Deferred Liabilitiesi

Other Long-TermOther Long-Term Liabilitie Convertible Debt(?) Liabilities(?) N/A

Non-Current Capital Leases(?) N/AOther Long-Term Liabilities(? N/A


Share Holders' Equity

Preferred Stock Preferred Stock Preferred StockCommon Stock Common Stock Common StockAdditional Paid-in Caoital Caoital Surolus NA Capital and Reserves(?)Retained Earnings Retained Earnings Retained EarningsTreasury Stock Treasury Share Treasury Stock

2. Income Statement

Net Sales Net Sales Net Sales Net Sales(Or Sales Revenue) Home Sales

Overseas Sales

Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold N/A

Gross Profit Gross Profit NA Gross Profit(Trading Profit)

Non-Operating Income Non-Operating Income Non-Operating Income Other Income (?)Interest

Other InOther ncome Exchange Gains or LgssesInvestment Gain or Loss Investment Gain or Loss I

Interest Expense Interest Expense Interest Expense Short-Term InterestMedium-Term InterstMisc. Interest

Depreciation & Depreciation & Amortization Depreciation & Depreciation & AmortizationAmor ization Amortization

Tax Expense Tax Expense Tax Expense Tax ExpenseCorporation TaxDeferred Tax

R&D Expenses R&D Expense R&D Expenses N/ASelling & Administration Selling & Administration Selling & Administration N/A


Investment Investment Investment Investment

NI before Extraordinary NI bofore Extraordinary NI Before Extraordinary NI Before Extraordinary ItemsItems Items Items

Extraordinary Items Extraordinary Items Extraordinary Items Exceptional Items

Net Income Net Income Net Income N/A

APPENDIX C

COMPARISONS OF ACCOUNTING PRINCIPLES

-46-

Item Unilted States lEurone .laban

Valuation

ConsolidatedStatements

Long-TermMarketableSecurities

Short-TermMarketableSecurities

inventory

intangibleA .. toe

*Historical Cost Valuation

*Consolidated Reportsare primiary reports

*Equity method appliedbased on 'significantinfluence'

*Valued at lower ofor market price

cost

'Valued at lower of costor market price

*Generally LIFO or FIFO*Manufacturing overhead

is allocated to year endinventory

*Generally valued atlower of cost or market

*Goodwill is amoritizednuar mny nf An vaarq

*Current Valuation

'Consolidated Reportsare optional

*Cost method generallyapplied

*Valued at lower of cost ormarket price

'Valued at lower of cost ormarket price

*Generally FIFO'Manufacturing overhead

is not allocated to year-end inventory

*Generally valued at lowercost or market, but WIP orfinished products arestated at production cost

*Goodwill is not amortized0 -- -- I

*Historical Cost Valuation

*Parent Company reportsare primary

*Equity method appliedbut, not necessarilybased on 'sifnificantinfluence'

Generally Valued athistorical cost

*Valued at lower of cost olmarket price

*Generally LIFO or FIFO'Manaufacturing overhead

is allocated to year-endinventory

*Generally valued at cost

*Goodwill is amortizednvAr max of 15 vears.

Item |United States Eurone I.lan

PP&E

Depreciation

Acquisition

Leases

Taxation

Long-TermDebt

R&D

Cash -Dividend

Treasury -Stnck

*Historical cost methodIs frequently used

*Mostly Straight Line

*Pooling of interst method

*Long-term leases arecapitalized

*Deferred tax is recordedon all timing differences

'Income taxes are shownas tax expense

*Discount/premium isamortized

*Must be expensed inthe year it occurs

'Appropriated asdeclared

*No differential taxtreatment

*Deducted from owners'au itv

*Acquisition or productioncost is used

*Mostly Straight line

*Purchase method

*not capitalized

*Deferred tax is notrecorded

*Tax is not a separateexpense item

*Not amortized

'Usually must beexpensed in the first

year

*Appropriated asdeclared

'Income paid as dividendis taxed at a lower rate

*No generally acceptedrjIA.

*Historical cost isfrequently used

*Mostly double Declining

*Purchase method

*not capitalized

*Deferred tax is not widelyused

*Business enterprize taxis included in SG&Aexpense item

*Not amortized

'Can be expensed orcapitalized andamortized over a maxof 5 years

*Appropriated as paid

'Income paid as dividendis taxed at a lower rate

*Deducted from owners'eauIitV

.

APPENDIX

RAW DATA FROM LotusOne

-49-

D-1

Deferred ChargesIntangiblesDeposits & Other AsTotal Assets

LIABILITIESNotes PayableAccounts PayableCurrent Long Term DCurrent Portion ofAccrued Expensesincome TaxesOther Current UablTotal Current LiabiMortgagesDeferred ChargesConvertible DebtLong Term DebtNon-Current CapitalOther Long Term UaTotal LiabilitiesMinority Interest (Preferred StockCommon Stock NetCapital SurplusRetained EarningsTreasury StockOther LiabilitiesShareholders' EquitTotal Liabilites &

Income Statement

Net SalesCost of GoodsGross ProfitResearch & DevelopmSelling, General &Income Before DepreDepreciation .& AmorNon-Operating IncomInterest ExpenseIncome Before TaxProvision for IncomMinority Interest (Investment Gains/LoOther Income

N/A593000

118000072182000

109770001160000

N/AN/AN/AN/A

1941100031548000

N/AN/AN/A

6401000N/A

2397700061926000

132000N/A

1940000N/A

5774000N/A

24100001012400072182000

FY 12/31/85

861960007038800015808000

N/A760800082000001725000-401000180200042720001713000

13000N/AN/A

N/A350000

172100078062000

98290007204000

N/AN/AN/AN/A

1433500031368000

N/AN/AN/A

6169000N/A

2792100065458000

340000N/A

1940000N/A

8079000N/A

22450001226400078062000

FY 12/31/86

840900006694300017147000

N/A859100085560002062000

294000195200048360002249000

36000N/AN/A

N/A297000

403400086951000

116100007607000N/AN/AN/AN/A

1528300034500000

N/AN/AN/A

6758000N/A

3037500071633000

484000N/A

1940000N/A

10124000N/A27700001483400086951000

FY 12/31/87

925200007446300018057000

N/A12808000524900022130004486000193700055850002220000

74000N/AN/A

-51-

Volvo Corp

Goteborg S-405Telephone:

Incorporated in: SW Number of Employees: 78614Fiscal Year End: 12/31 Current Shares Out: 77605000Traded on: Other Ticker Symbol: VOLVY

AUDIT INFORMATION

Auditors: Deloitte, Haskins & SellsAuditors Opinion: Unqualified

HISTORICAL COMPANY FINANCIALS

AS REPORTED (Foreign Currency, see Comments to Financials)

Balance Sheet FY 12/31/86 FY 12/31/87 FY 12/31/88

ASSETSCash 4537000 5138000 4368000Marketable Securiti 13240000 17359000 11264000Receivables 12346000 12724000 13945000Inventory 18235000 16561000 19401000Raw Materials N/A N/A N/AWork in Progress N/A N/A N/AFinished-Goods N/A N/A N/ANotes Receivable N/A N/A N/AOther Current Asset N/A N/A N/ATotal Current Asset 48358000 51782000 48978000Property Plant & Eq 12074000 13373000 15610000Accumulated Depreci N/A N/A N/ANet Property, Plant 12074000 13373000 15610000Investment & Advanc 8882000 9880000 14068000Other Non-Current A 1095000 956000 3964000

-50-

Not Income Before E 2546000 2551000 3291000Extraord Items & Di N/A N/A N/ANeInCome 2546000 2551000 3291000

-52-

Honda Motor Co Ltd

No. 1-1. 2-ChomeMinami-AoyamaMinato-KuTokyo 107Telephone:

Incorporated In: JA 71000Fiscal Year End: 3/31 4.74E+08

Traded on: NYSE

AUDIT INFORMATION

Auditors: Peat Marwick Minato


AS REPORTED (Foreign Currency, see Comments to Financials)

Balance Sheet FY 2/28/87 FY 3/31/88 FY 3/31/89

ASSETSCash 134785 130020 247298Marketable Securiti N/A N/A N/AReceivables 135943 170972 402113Inventory - 430607 401017 475178Raw Materials N/A N/A N/AWork In Progress N/A N/A N/AFinished Goods N/A N/A N/ANotes Receivable N/A N/A N/AOther Current Asset 160955 232106 144571Total Current Asset 862290 934115 1269160Property Plant & Eq 1239787 1323542 1637345Accumulated Deprecd 551970 633773 771250

-53-

Net Property, Plantinvestment & AdvancOther Non-Current ADeferred ChargesIntangiblesDeposits & Other AsTotal Assets

LIABILITIESNotes PayableAccounts PayableCurrent Long Term DCurrent Portion ofAccrued ExpensesIncome TaxesOther Current LiabiTotal Current LiabiMortgagesDeferred ChargesConvertible DebtLong Term DebtNon-Current CapitalOther Long Term LiaTotal LiabilitiesMinority Interest (Preferred StockCommon Stock NetCapital SurplusRetained EarningsTreasury StockOther LiabilitiesShareholders' EquitTotal Liabilites &

Income Statement

Net SalesCost of GoodsGross ProfitResearch & DevelopmSelling, General &Income Before DepreDepreciation & AmorNon-Operating IncomInterest ExpenseIncome Before TaxProvision for Incom

6878171139831065213927

N/A5816

1694485

105045386686

11944N/A1267093796440197

708545N/A27955N/A202585N/A

2436941521N/AN/A57804

127665751730N/A

-184235752964

1694485

FY 2/28/87

28683052057442810863144844496374169645N/A2045324532

16556686269

689769138578

986812485

N/AN/A

1784815

104792436406

15899N/A1654453381246981

803335N/A29482N/A169461N/A

28601005138

N/AN/A63312

132730866998N/A

-283363779677

1784815

FY 3/31/88

15846221175085409537

85094255811

68632N/A36298138369109442488

866095117447N/AN/AN/A

317472284449

300943389057

55176N/A2087783000563411

1047370N/A

34049N/A301572N/AN/A

1382991N/AN/A

68894155790953014N/A

-276240901458

2284449

FY 3/31/89

34892582544188

945070183652584360177058N/A1957824547172009

80559

-54-

Minority Interest ( N/A N/A N/AinvestMent Gains/Lo N/A N/A N/AOther Income 4392 8070 5769Net income Before E 83689 56678 97299Extraord Items & Di N/A N/A N/ANet Income 83689 56676 97299

- 55 -


Ford Motor Co

The American RoadDearborn, 1 48121Telephone: 313-322-3000

incorporated in: DEFiscal Year End: 12/31Traded on: NYSE

Number of Employees:Current Shares Out:

Ticker Symbol: F

AUDIT INFORMATION

Auditors: Coopers & LybrandAuditor's Opinion: UnqualifiedExplanation, Change in Method of Consolidation


AS REPORTED ($000)

Balance Sheet

ASSETSCashMarketable SecuritiReceivablesInventoryRaw MaterialsWork in ProgressFinished GoodsNotes ReceivableOther Current AssetTotal Current AssetProperty Plant & EqAccumulated DepreciNet Property, PlantInvestment & Advanc

FY 12/31/86

3459400509370034878005792600

N/AN/AN/AN/A

624500184580002638790013187200132007005088400

FY 12/31/87

5672900442410044016006321300

N/AN/AN/AN/A

1161600219815003212240018088900140335007573900

FY 12/31/88

67249008045100

956866006638200

N/AN/AN/AN/A

179380011888860015992200

N/A159922002102700

- 56-

Other Non-Current ADeferred ChargesIntangiblssDeposits A Other AsTotal Assets

LIABIUTIESNotes PayableAccounts PayableCurrent Long Term 0Current Portion ofAccrued ExpensesIncome TaxesOther Current UabiTotal Current UabiMortgagesDeferred ChargesConvertible DebtLong Term DebtNon-Current CapitalOther Long Term UaTotal UabilitiesMinority Interest (Preferred StockCommon Stock NetCapital SurplusRetained EarningsTreasury StockOther UabilitiesShareholders' EquitTotal Liabilites &

Income Statement

Net SalesCost of GoodsGross ProfitResearch & DevelopmSelling, General &Income Before DepreDepreciation & AmorNon-Operating IncomInterest ExpenseIncome Before TaxProvision for IncomMinority Interest (Investment Gains/Lo

N/AN/AN/A

118590037933000

N/A82984001304000

N/A5285700

737500N/A

15625600N/A

13281'00N/A

2137100N/A

387700022967800

105700N/A

536800605500

14167200N/A

-4500001485950037933000

FY 12/31/86

627158005186620010849600

N/A3833500701610029596001495700482900

50693001774200

10000N/A

N/AN/AN/A

136680044955700

N/A91881001882700

N/A6075000

647600N/A

17793400N/A

2354700N/A

1751900N/A

442650026326500

136500N/A

507500595100

16717500N/A

6726001849270044955700

FY 12/31/87

716434005849510013148300

N/A5132900801540018142001619400440600

73800002726000

28800N/A

1010500N/AN/A

5372500143366500

N/A38133500

1760900N/AN/A

1065300N/A

40959700N/A

3933100N/A

68187400N/A

8593200121673400

164100N/A

490800 -

58670020126500

N/A325000

21529000143366500

FY 12/31/88

924456007401730018428300

N/A6972500

1145580037923001033000354000

83425002998700

43600N/A

- 57 -

Other Income N/A N/A - N/ANetlocome Before E 3285100 4625200 5300200Extraord Items & DI N/A N/A N/ANet Income 3285100 4625200 5300200

-58-

APPENDIX D - 2

RAW DATA FROM DATALINE

-59-

Company required: volak

VOLVO~-UThe data is now being collated.

Options available are to display:1. Income statement2. Balance sheet3. Financing table4. Accounting ratios5. All four statements

Enter code number required: 2

Is the tabulation to be a:1. Summary2. Basic analysis3. Detailed analysis

Enter'code number required: 3

---------- --------------------------------------------- ------------VOLVO AS VOLAK SWEDEN

(--------------------------------------------------------BALANCE SHEET Kroner (m

Period ending 31-12-84 31-12-85 31-12-86 31-12-87 31-12-88--- - - - - - - - - - - - - - - - - -

CAPITAL EMPLOYED

CAPITAL AND RESERVES

ORDINARY SHARE CAPITALRESERVES

TOTAL CAPITAL AND RESERVES

1940. 1940. 1940. 1940. 1940.5416. 6858. 8184. 10324. 12894.

7356. 8798. 10124. 12264. 14834.

DEFERRED LIABILITIES

DEFERRED TAXMISC. DEFERRED LIABILITIES

TOTAL DEFERRED LIABILITIES

MINORITY INTERESTS

0. 0. 0. 1003. 1017.16868. 19604. 23977. 26918. 29358.

16868. 19604. 23977. 27921. 30375.

229. 116. 132. 340. 484.

LOAN CAPITAL

LOAN STOCKSOTHER LOANS

TOTAL LOAN CAPITAL

1871. 2710. 2260. 1739. 2140.5239. 4709. 4141. 4430. 4618.

7110. 7419. 6401. 6169. 6758.

-60-

TOTAL CAPITAL EMPLOYED

TOTAL~CAPITAL EMPLOYED

(INC. SHORT TERM LOANS)

31563. 35937. 40634. 46694. 52451.

41394. 46206. 51611. 56523. 64061.

ASSETS EMPLOYED

GROSS FIXED ASSETS

LAND + BUILDINGSPLANTMACHINERY + EQUIPMENT

TOTAL GROSS FIXED.ASSETS

DEPRECIATION

LAND + BUILDINGSPLANT,MACHINERY + EQUIPMENT

TOTAL DEPRECIATION

0.16563.

16563.

0.8364.

8364.

0.18996.

18996.

0.9431.

9431.

7670.16294.

23964.

2732.9158.

11890.

8099.18653.

26752.

2889.10490.

13379.

9472.20764.

30236.

3032.11594.

14626.

NET FIXED ASSETS

LAND + BUILDINGSPLANTMACHINERY + EQUIPMENT

TOTAL NET FIXED ASSETS

INTANGIBLES

INVESTMENTS

INVESTMENTS (BOOK VALUE)

OTHER ASSETS

0.8199.

8199.

419.

0.9565.

9565.

620.

4938.7136.

12074.

593.

5210.8163.

13373.

350.

6440.9170.

15610.

297.

5409. 6894. 8882. 9880. 14068.

2975. 4032. 2275. 2677. 7998.

CURRENT ASSETS

STOCKS - RAW MATERIALSSTOCKS - FINISHED GOODSWORK IN PROGRESS

TOTAL STOCK + WORK IN PROGRESS

3564.8158.2620.

14342.

3532.8416.2716.

14664.

N/AN/AN/A

17650.

N/AN/AN/A

16469.

N/AN/AN/A

18361.

-61-

DEWrORS 13265. 11244. 12346. 12724. 13945.SH.TERN INVESTMENTS+DEPOSITS 7307. 11572. 13825. 17451. 12304.CASH + EQUIVALENTS 5713. 4202. 4537. 5138. 4368.

TOTAL CURRENT ASSETS 40627. 41682. 48358. 51782. 48978.

CURRENT LIABILITIES

BANK LOANS + OVERDRAFTS 6074. 6595. 5879. 6157. 8671.SHORT TERM BORROWINGS 3757. 3674. 5098. 3672. 2939.CREDITORS 11898. 11993. 13182. 13532. 15736.CURRENT TAXATION 2134. 2247. 2816. 2848. 3323.OTHER CURRENT LIABILITIES 2203. 2347. 4573. 5159. 3831.

TOTAL CURRENT LIABILITIES 26066. 26856. 31548. 31368. 34500.

TOTAL NET CURRENT ASSETS 14561. 14826. 16810. 20414. 14478.

TOTAL ASSETS EMPLOYED 31563. 35937. 40634. 46694. 52451.




Enter code number required: \

DATALINE - LAST FIVE YEARS ACCOUNTS

Company required: volak

VOLVO ABThe data is now being collated.



Is the tabulation to be a:

-62-

1. Summary2. Basic analysis3. Detailed analysis


--------- ------------------------------------------------------------VOLVO AB VOLAK SWEDEN

--- IN SE-------------------------------COME STA- ---------INCOME STATEMENT Kroner (m

Period ending 31-12-84 31-12-85 31-12-86 31-12-87 31-12-88--- - - - m - -m

SALES

TOTAL SALES 87052. 86196. 84090. 92520. 96639.

4829. 4704. 5890. 5249. 7186.TRADING PROFIT

LESS

DEPRECIATION

MISC. INTEREST

1402. 1725. 2062. 2213. 2293.

1803. 1802. 1952. 1937. 1961.

PLUS

TOTAL OTHER INCOME

PRE-TAX PROFITS

1639. 3095. 2960. 4486. 3000.

3263. 4272. 4836. 5585. 5932.

LESS

TAXATION

. TOTAL TAXATION

PROFIT AFTER TAX

1624. 1713. 2249. 2220. .2500.

1639. 2559. 2587. 3365. 3432.

LESS

MINORITY INTEREST

EARNED FOR ORDINARY

ORDINARY DIVIDENDS

74. 13. 36. 74. 103.

1565. 2546. 2551. 3291. 3329.

411. 660. 718. 815. 1086.

-63-

ADJ. RETAINED EARNINGS 1154. 1886. 1833. 2476. 2243.

TOTAL RETENTIONS 1154. 1886. 1833. 2476. 2243.



NB. Financing Table tabulations are not available for this company.

Enter code number required: \

DATALINE - LAST FIVE YEARS ACCOUNTS

Company required: hond

HONDA MOTOR COThe data is now being collated.

Options available are to display:i. Income statement2. Balance sheet3. Financing table4. Accounting ratios5. All four statements




-----------------------------------------------------------------HONDA MOTOR CO HOND JAPAN

BALANCE SHEET Yen (m

Period ending 28-02-86 28-02-87 30-09-87 31-03-88 31-03-89

-- ------- M- -------- - ------ -----

CAPITAL EMPLOYED

CAPITAL AND RESERVES

-64-

ORDINARY SHARE CAPITALSHARE PREMIUM ACCOUNTRESERVES

TOTAL CAPITAL AND RESERVES

55781.116787.588910.

57804.127665.567495.

60133.130925.588712.

63312.132730.583635.

68894.155790.676774.

761479. 752964. 779770. 779677. 901458.

DEFERRED LIABILITIES

DEFERRED TAXMISC. DEFERRED LIABILITIES

TOTAL DEFERRED LIABILITIES

28582. 27955. 32926. 29482. 34049.2635. 2436. 2335. 0. 0.

31217. 30391. 35261. 29482. 34049.

LOAN CAPITAL

OTHER LOANS

TOTAL CAPITAL EMPLOYED

TOTAL CAPITAL EMPLOYtD

(INC. SHORT TERM LOANS)

213083. 202585. 183927. 205260. 301572.

1005778. 985940. 998958. 1014419. 1237079.

1098167. 1102929. 1097724. 1279513. 1593198.

ASSETS EMPLOYED

GROSS FIXED ASSETS 1121474. 1239787. 1281232. 1401506. 1637345.

DEPRECIATION 481770. 551970. 597160. 671081. 771250.

NET FIXED ASSETS

PLANT,MACHINERY + EQUIPMENT

TOTAL NET FIXED ASSETS

INTANGIBLES

INVESTMENTS

INVESTMENTS (BOOK VALUE)ASSOCIATED COMPANIESINTER-GROUP

639704. 687817. 684072. 730425. 866095.

639704. 687817. 684072. 730425. 866095.

12738. 13927. 13554. 0. 0.

39519.71931.58633.

36639.77344.

5816.

37223.83635.

8932.

54448.36639.

0.

69579.47868.

0.

-65-

TOTAL INVESTMENTS

OTHER ASSETS

CURRENT ASSETS

STOCKS - RAW MATERIALSSTOCKS - FINISHED GOODSWORK IN PROGRESS

170083. 119799. 129790. 91087. 117447.

11088. 10652. 9222. 23289. 31747.

68396.358208.

14403.

64026.351885.

14696.

71632.342601.

15639.

79777.322011.

15079.

81081.374819.

19278.

TOTAL STOCK + WORK IN PROGRESS 441007. 430607. 429872. 416867. 475178.

DEBTORSCASH + EQUIVALENTSOTHER CURRENT ASSETS

TOTAL CURRENT ASSETS

CURRENT LIABILITIES

BANK LOANS + OVERDRAFTSSHORT TERM BORROWINGSCREDITORSCURRENT TAXATIONOTHER CURRENT LIABILITIES

TOTAL CURRENT LIABILITIES

TOTAL NET CURRENT ASSETS

TOTAL ASSETS EMPLOYED

841737. 862290. 902625. 1131769. 1269160.

81874.10515.

529814.15058.32311.

105045.11944.

513395.37964.40197.

82315.16451.

562870.34940.43729.

241392.23702.

606911.37447.52699.

300943,55176. -597835.

30005.63411.

669572. 708545. 740305. 962151. 1047370.

172165. 153745. 162320. 169618. 221790.

1005778. 985940. 998958. 1014419. 1237079.



It the tabulation to be a:1. Summary2. Basic analysis3. Detailed analysis

Enter code number requireds 3

-66-

126527.118912.155291.

135943.134785.160955.

143476.127685.201592.

330156.246350.138396.

402113.247298.144571.

HONDA MOTOR CO HOND JAPAN

INCOME STATEMENT Yen (m

Period ending 28-02-86 28-02-87 30-09-87 31-03-88 31-03-89--- - - - - - - - -- - - - - - - - - -

SALES

TOTAL SALES

TRADING PROFIT

2909574. 2868305. 1778384. 1650781. 3489258.

300383. 164686. 87825. 72530. 167840.

LESS

MISC. INTEREST

PLUS

31047. 24532. 13194. 10687. 24547.

TOTAL OTHER INCOMEASSOC. COMPANIES PROFIT SHARE

PRE-TAX PROFITS

32728. 25412. 13245. 39150. 28796,3306. 4392. 5034. 2113. 5769.-

305370. 169958. 92910. 103106. 177858.

LESS

TAXATION

TOTAL TAXATION

PROFIT AFTER TAX

EARNED FOR ORDINARY

ORDINARY DIVIDENDS

ADJ. RETAINED EARNINGS

LESS NET ASSOC.CO.PROFIT SHARE

TOTAL RETENTIONS

158868. 86269. 42076. 46430. 80559.

146502. 83689. 50834. 56676. 97299.

146502. 83689. 50834. 56676. 97299.

10758. 10892. 6477. 5613. 12305.

135744. 72797. 44357. 51063. 84994.

-3306. -4392. -5034. -2113. -5769.

132438. 68405. 39323. 48950. 79225.

-67-

APPENDIX D - 3

RAW DATA FROM DISCLOSURE 1I

- 68-

Ford Motor Company

Balance Sheet

Cash & EquivalentsAccounts ReceivableInventoriesOther Current Assets


Gross PlantAccum Depreciation

Press (CR> for more !

Net PlantInv & Adv to SubsDeferred ChargesIntangible AssetsOther Long-Term Asset

Total Assets

Accounts PayableAccrued ExpensesTaxes PayableOther Current LiabDeferred TaxesMinority InterestLong-Term DebtOther Long-Term Liab

Total Liabilities-

Preferred StockCommon StockRetained Earnings

Treasury StockOther Liab

Total Equity

12/87

13481.5073704.50

6326.901179.30

94692.20

12/88

14770.0095686.606638.201793.80

118888.60

14683.70 15992.20N/A N/A

14683.702001.20

N/AN/A

4617.30

15992.202102.70

N/AN/A

6383.00

115994.40 143366.5028218.40

N/A720.90

Nl/A3798.20

129.7056408.10

8226.40

97372.00

N/A1102.60

16717.500.00

672.60

18492.70

38133.50N/A

1065.30N/A

3933.10164.10

69948.308593.20

121673.40

N/A1077.50

20126.500.00

325.00

21529.00

Total Liab & O.E. 115864.70 143202.40

-69-

Income Statement

Net SalesCost of Goods SoldSelling & Admin ExpR & D ExpensesDepreciation, Amort.Total InterestNon-op Income/Expen

Pretax IncomePress (CR> for more !

Total TaxesMinority Interest

Invest Gain/LossOther Income

Net Income Before ExtExtraordinary Items

12/86

62715.8051866.203833.50

N/A2959.60

482.90-1495.70

5069.30

1774.2010.00

N/AN/A

3285.10N/A

12/87

79893.0062870.80

5911.60N/A

3459.90452.90

-686.90

7884.70

3226.0033.50

N/AN/A

4625.20N/A

12/88

92445.60

74017.30

6972.50

N/A

3792.30

354.00

-1033.00

8342.50

2998.70

43.60

N/A

N/A

5300.20

N/A

-70-

Volvo

Balance Sheet

12/87 12/88

Cash & EquivalentsAccounts ReceivableInventories.Other Current Assets




Total Assets


Total Liabilities

Preferred StockCommon StockRetained EarningsTreasury Stock

Other Liab

Total Equity

Total Liab & O.E.

22.5012.7216.560.00

15.6313.9519.400.00

51.78 48.98

13.37N/A

13.379.88N/A

0.352.68

78.06

7.20N/AN/A

14.34N/A

0.346.17

27.92

65.46

N/A1.948.080.002.25

12.26

77.72

15.61N/A

15.6114.07

N/A0.308.00

86.95

7.61N/AN/A

15.28N/A

0.486.76

30.38

71.63

N/A1.94

10.120.002.77

14.83

86.47

-71-

I'I

Income Statement

Net SalesCost of Goods SoldSelling & Admin ExpR & D ExpensesDepreciation, AmortTotal InterestNon-op Income/Expen

Pretax Income




12/86

84.0966.948.59

N/A2.061.95

-0.29

4.84

2.250.04

N/AN/A

2.55N/A

12/87 12/88

92.52 96.6474.46 77.1112.81 10.03N/A N/A

2.21 2.291.94 1.96

-4.49 -0.69

5.58 5.93

2.220.07

2.500.10

N/A N/AN/A N/A

3.29N/A

3.33N/A

-72-

Honda Motor Company

Balance Sheet

Cash & EquivalentsAccounts ReceivableInventoriesOther Current Assets




Total Assets


Total Liabilities

Preferred StockCommon StockRetained EarningsTreasury Stock

Other Liab

Total Equity

Total Liab & O.E.

-73-

3/88

0.250.330.420.14

1.13

1.400.670.730.09

N/AN/A

0.02

1.98

0.440.170.040.050.03N/A

0.230.00

1.20

N/A0.200.870.00

-0.28

0.78

1.97

3/89

0.250.400.480.14

1.27

1.640.770.870.12

N/AN/A

0.03

2.28

0.390.210.030.060.03

N/A0.360.00

1.38

N/A0.220.950.00

-0.28

0.90

2.28

-0 1

Income Statement

Net SalesCost of Goods SoldSelling & Admin ExpR & D ExpensesDepreciation, AmortTotal InterestNon-op Income/Expen

Pretax Income




3/87

2.962.110.520.15N/A

0.03-0.02

0.17

0.09N/A

N/A0.00

0.08N/A

3/88

1.651.210.270.09

N/A0.01

-0.04

0.10

0.05N/A

N/A0.00

0.06N/A

-74-

3/89

3.492.540.580.18N/A

0.02-0.02

0.17

0.08N/A

N/A0.01

0.10N/A

A 0

BIBLIOGRAPHY

[1] Bavishi, B., F. Choi, and 1. Shawky, "Analyzing the Financial Ratios of the World's 1000 LeadingIndustrial Companies", Business International, 1981.

[2] Brealey, Richard A. & Myers, Stewart C., "Principles of Corporate Finance", McGraw Hill Company,1988.

[3] Choi, F.D.S., H. Hino, S.K. Min, S. 0. Nam, J. Ujiie, & A. I. Stonehill, "Analyzing ForeignFinancial Statements: The Use and Misuse of International Ratio Analysis", Journal ofInternational Business Studies, 1983.

[4] Foster, G., "Financial Statement Analysis", New Jersey: Prentice - Hall, Inc., 1986.

[5] Hax, Arnoldo C. & Majluf, Nicolas S., "Strategic Management: An Integrative Perspective", NewJersey: Prentice Hall, Inc., 1988.

[6] Kohler, Erie L., "A Dictionary for Accountants", New Jersey: Prentice - Hall, Inc., 1983.

[7] Madnick, Stuart E. & Wang, Y. Richard, "A Framework of Composite Information Systems forStrategic Advantage", in Composite Information Systems Volumel, 1988.

[8] Madnick, Stuart E. & Wang, Y. Richard, "Logical Connectivity: Applications, Requirements, and AnArchitecture", in Composite Information Systems Volume 1, 1988.

[9] Paget, Maria L., "A Knowledge-Based Approach Toward Integrating International On-line Databases",WP#CIS-89-01, Sloan School of Management, MIT, 1989.

[10] Wang, Y. Richard & Madnick, Stuart E., "Connectivity Among Information Systems", inComposite Information Systems Volume 1, 1988.

[11] Wang, Y. Richard & Madnick, Stuart E., "Facilitating Connectivity in Composite InformationSystems", in Composite Information Systems Volume 1, 1988.

[12] Wang, Y. Richard & Madnick, Stuart E., "Inter-Database Instance Identification in CompositeInformation Systems", in Composite Information Systems Volume 1, 1988.

-75 -

an accounting model-based approach toward integration of

Documents