The Effects of Ifrs on Financial Ratios

Topics: International Financial Reporting Standards, Balance sheet, Generally Accepted Accounting Principles Pages: 47 (12688 words) Published: October 22, 2012
TheEffectsofIFRS onFinancialRatios:
EarlyEvidenceinCanada

By: ichelBlanchette,François-ÉricRacicot M andJean-YvesGirard

Sponsor: ockLefebvre,MBA,CFE,FCIS,FCGA R ResearchandStandards,CGA-Canada ElenaSimonova,MA(Economics),MPA ResearchandStandards,CGA-Canada

AbouttheAuthors
Michel Blanchette, FCMA, CA is a professor of Accounting with Université du Québec en Outaouais. François-Éric Racicot is a Professor of Business with Université du Québec en Outaouais, and Jean-Yves Girard, CMA, is an Industrial Analysis and Development Officer at Industry Canada, Government of Canada. The authors thank Diane Bigras, Denis Cormier and Thérèse Roy for their comments on an earlier version.

AboutCGA-Canada
Founded in 1908, the Certified General Accountants Association of Canada (CGA-Canada) is a selfregulating, professional association of 75,000 students and Certified General Accountants — CGAs. CGA-Canada develops the CGA Program of Professional Studies, sets certification requirements and professional standards, contributes to national and international accounting standard setting, and serves as an advocate for accounting professional excellence. CGA-Canada has been actively involved in developing impartial and objective research on a range of topics related to major accounting, economic and social issues affecting Canadians and businesses. CGA-Canada is recognized for heightening public awareness, contributing to public policy dialogue, and advancing public interest. For more information, contact can be made through: 100 – 4200 North Fraser Way, Burnaby, BC, Canada, V5J 5K7 Telephone: 604-669-3555 Fax: 604-689-5845 1201 – 350 Sparks Street, Ottawa, ON, Canada, K1R 7S8 Telephone: 613-789-7771 Fax: 613-789-7772 Electronic access to this report can be obtained at www.cga.org/canada ISBN 978-1-55219-641-0 © By the Certified General Accountants Association of Canada, 2011. Reproduction in whole or in part without written permission is strictly prohibited.

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Certified General Accountants Association of Canada

TableofContents
Abstract .................................................................................................................................. Executive Summary ................................................................................................................. 1. 2. 5 7

Introduction .................................................................................................................... 11 International Financial Reporting Standards (IFRS) ...................................................... 2.1. Evolution of Canadian GAAP towards IFRS ..................................................... 2.2. Main features of IFRS ......................................................................................... 2.3. The unique context of the first application of IFRS............................................. 13 13 15 19

3.

Financial Ratios .............................................................................................................. 21 3.1. Selected ratios ...................................................................................................... 21 3.2. Effects of IFRS on financial ratios....................................................................... 23 Methodology and Data ................................................................................................... 31 4.1. Research design ................................................................................................... 31 4.2. Data ..................................................................................................................... 31 Results ............................................................................................................................ 5.1. Comparison of means, medians and variances ..................................................... 5.2. Analysis of...
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