Assessing a firm’s performance under IFRS: The case of Coca-Cola Hellenic

Abstract

The conversion of accounting standards from Greek Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) raises the issue of the firm’s reported performance. As far as the reported performance is concerned, the statement of cash flows is an extra regulation for Greek GAAP in accordance with IFRS. Therefore, in this paper, we put special emphasis on standards IFRS 7, the statement of cash flows and the usefulness of this standard in assessing a firm’s reported performance. In this paper, we present the process of assessing a firm’s statement of cash flows or to adjust its ability to generate and grow earnings and cash flow. Prior to undertaking any analysis appropriate to the above purpose, we introduce the concepts of the adoption of IFRS in Greece and then we explore the context of IFRS 7 as the aim, use, and construction of the cash flow statement (classification and presentation) but also the accounting handling of it. It may additionally be necessary to use tools and techniques which facilitate assessment of the firm’s financial and operational data. Concerning that, we adjust the phase of a firm’s life cycle but also the amounts associated with the statement of cash flows by creating common size analysis from it and calculating the free cash flow as well as the ratios suggested by IFRS7. However, in order to achieve the paper’s purpose, we present the case of Coca Cola Hellenic Bottling Company, including real reported corporate data, for educational purposes only. For well-supported conclusions, the application of a firm’s assessing is enhanced by using 5 years of data. At every stage of assessment, the paper reports the results of the analysis and highlights the most important aspects of the analysis. Finally, in summary, adjusting a firm’s statement of cash flows gives a more complete picture of the firm’s financial condition. It shows the quality of earnings, liquidity, and flexibility. It is apparent that IFRS 7 improves the relevance, and thereby, the quality, or at least some reported numbers.