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T E C H N O L O G Y
electronic reporting
Using XBRL to Analyze Financial Statements
A Step-by-Step Spreadsheet Guide
By Thomas Tribunella and
Heidi Tribunella
A
ccounting and financial data has
long been contained in paper documents, but it is now possible to
identify, transfer, and store financial information electronically. XML (Extensible
Markup Language) and XBRL (Extensible
Business Reporting Language) can give us
the ability to tag specific pieces (elements)
of financial information so they can be
used and reused in a variety of reports.
XBRL is a text and data markup language similar to HTML (Hyper Text
Markup Language), created in the metalanguage of XML. XBRL allows content
such as financial statement elements to be
electronically labeled with conceptual tags.
The discussion below will demonstrate
how to use XBRL data with a spreadsheet for financial analysis. It will show
how XBRL data can be easily updated in
the spreadsheet as new financial data
becomes available.
Both Microsoft Office versions 2003
and 2007 are XML compliant, as are most
databases, accounting systems, and enterprise
systems. This means that these systems can
automatically tag and export data and information in XML format. Accordingly, this
information can be imported into another
application, such as a spreadsheet, for
analysis. In addition, XML-compliant
documents can be posted directly to the
Internet for display, as most web browsers
can read XML documents.
Step 1: Prepare the Spreadsheet
The steps outlined below use Microsoft
Excel 2007. Before starting the procedures
outlined in this article, make sure that you
have the developer tab displayed. If it is
not displayed, simply click on the
Microsoft Office Button in the top left corner and then choose “Excel Options” from
MARCH 2010 / THE CPA JOURNAL
the drop down menu. In the dialog box,
under “Top options for working with
Excel,” check the third box, “Show
Developer tab in the Ribbon,” and then
click “OK.”
Step 2: Identify the Company and Report
This example uses the financial statements
from Adobe Systems Inc., specifically its
Form 10-Q for the quarter ended August 29,
2008. To download the financial statements
as a PDF for use as a reference while devel-
oping the sample spreadsheet, go to
www.sec.gov. Click on “Search” in the
upper right corner. In the “Search Company
Filings” pane on the left, enter Adobe into
the “Company name” field and click on
“Find Companies.” As the example uses
Adobe Systems Inc., click on CIK number
0000796343 to see the filings. Scroll down
to the 10-Q filing dated 2008-10-02 and click
on the “Documents” button. From the resulting list, click on the file “form10qunofficial_
pdf.pdf.”
69
Pages 1 to 5 of the 10-Q of the PDF can
be used as a reference.
top or other desired location. Refer to
Exhibit 1.
Step 3: Download the XBRL Report
Step 4: Open the XML Source within
an Excel Spreadsheet
To download the XBRL-compliant
report from the SEC for 10-Q, follow the
steps above. Then, look down the list of
documents, below the PDF, and right-click
the XBRL Instance Document file named
“adbe-20080916.xml.” Choose “Save
Target As …” and save the file to the desk-
The next step is to integrate the tagged
data source into the spreadsheet. To access
the tagged data, complete the following
procedures:
■ From within Microsoft Excel, open the
XML file downloaded in step 3.
EXHIBIT 1
File Download
■ Excel will recognize the file as an
XML file, and an “Open XML” dialog box
will appear. Select “Use the XML Source
task pane” and click “OK.”
A dialog box that states: “The specified
XML source does not refer to a schema.
Excel will create a schema based on the
XML source data” will then appear. The
user should click “OK.”
The tagged data will be shown in a sidebar of the Excel spreadsheet. Excel has
created a taxonomy of tags from the
structured XML-compliant document.
Step 5: Determine the Output
Information and Identify the Input Data
With the data in hand, a user can determine whatever information is needed, such
as financial ratios, horizontal analysis,
and vertical analysis. Four ratios will suffice to demonstrate the process. Exhibit 2
shows the input data and the related XBRL
tags and cell locations.
After the data needs are determined, a
user can work on importing the input data
to produce the output information. Input
data should only be entered once.
Step 6: Map the XBRL Tags into the
Input Section
EXHIBIT 2
Input Data
Excel
Input Cell
XBRL Tag Name
Value in
Thousands
B3
ns3:CashAndCashEquivalentsAtCarryingValue
1,134,263
B9
ns3:ShortTermInvestments
866,641
B13
ns3:AccountsReceivableNetCurrent
327,970
B17
ns3:AssetsCurrent
2,517,120
B21
ns3:LiabilitiesCurrent
661,663
E3
ns3:Revenues
887,257
E9
ns3:GrossProfit
776,406
E15
ns3:NetIncomeLoss
191,608
70
Once all of the XBRL tags are shown
in the source task pane, it is a simple process to map the data elements to the cells
in the input data section of the spreadsheet.
Two methods can be used to map the data:
1) click on the data element <value> and
drag it to the target cell or 2) select the target cell on the spreadsheet and double-click
on the data item <value> shown in the
source task pane.
Data elements can only be mapped to
one cell; the same element cannot be
mapped to two different cells. If the data
is needed in more than one cell, simply add
a formula (e.g., +A2) to put the data in a
second cell. It may be helpful to show the
actual numerical data in the XML Source
task pane while mapping. To do so, simply click the “Options” menu on the bottom of the XML Source task pane and
select “Preview Data in Source Pane.”
Once mapped, the cell has a blue background, and in the source task pane, the
data element is bolded to indicate it has
already been mapped. When bringing the
tags into the spreadsheet, the name of the
tag is automatically placed above the
MARCH 2010 / THE CPA JOURNAL
data. To remove the tag names and use
custom names, simply uncheck the
“Header Row” box within the “Table Style
Options” on the Design Tab.
The input data required to calculate the
desired output information in this example are: current assets, current liabilities,
cash, short-term investments, accounts
receivable, net income, sales, and gross
profit. The following steps will include
this data in the input section and program the cells in the output section to calculate the desired ratios: current ratio,
quick ratio, profit margin, and gross profit margin.
The data will appear in the spreadsheet
cells once the import function is complete. When the data is imported, the financial statements are comparative, so the data
will take up two rows for the balance sheet:
one for the current year, listed first, and
one for the prior year. The data will take
up four rows on the income statement, as
four columns appear on the Adobe income
statement. Refer to Exhibit 3 for a view
of the completed spreadsheet prior to
importing the XML data.
EXHIBIT 3
Spreadsheet View Prior to Import of Data
Step 7: Populate the Spreadsheet by
Importing the Data
Once the spreadsheet is mapped and
labeled, it is time to import the data. The
authors have found that it is easier to
enter the formulas for the output section
after the data has been imported. To do so,
simply place the cursor in any cell. Click
on the “Developer Tab” and then click
“Import.” An XML Import dialog box will
appear. Select the file with the XML data
in it and click “Import.” The data will be
pulled into the spreadsheet cells. See
Exhibit 4 for a screenshot of an Excel
spreadsheet with the imported XMLcompliant data. One can now format the
data with commas and decimals, as well
as place lines and borders as appropriate.
Compare the data imported to the printout
of the 10-Q to note that the imported data
is comparative financial information.
EXHIBIT 4
XML Data Imported
Step 8: Create the Formulas
At this point, the cell formulas can be
entered into the output section of the
spreadsheet. The Excel formulas and their
related addresses are shown in Exhibit 5.
The spreadsheet is organized with
input and output sections so that changes
MARCH 2010 / THE CPA JOURNAL
71
in the input data have no effect on the
output information. As a result, the data
can be updated quickly without re-creating
the cell formulas. Exhibit 6 presents the
completed spreadsheet, which includes the
formatted data as well as formulas for the
financial statement analysis.
Step 9: Change the Input Section
The real power of this technique comes
from the ability to update the spread-
sheet with additional data. To show this,
download the next quarter’s 10-Q for
Adobe Systems, the quarter ending
February 28, 2009. It is under the filing
date 2009-04-03 and has the file name
of adbe-20090227.xml (see Step 2).
Follow the instructions to import the
data (Step 7). The data from this file can
now be incorporated into the spreadsheet,
and the financial statement ratios are automatically recalculated.
EXHIBIT 5
Spreadsheet Formulas for Output Section
Ratio
Calculation
Cell
Excel Formula
Current Ratio
Current Assets
Current Liabilities
B27
=B18/B22
Quick Ratio (Acid Test)
Cash + S.T.
Investments + A.R.
Current Liabilities
B28
=(B4+B10+B14)/B22
Gross Profit Percentage
(Gross Margin Ratio)
Gross Profit
Sales or Revenue
B29
=E10/E4
Profit Margin Percentage
(Return on Sales)
Net Income
Sales or Revenue
B30
=E16/E4
EXHIBIT 6
Completed Spreadsheet
Possibilities of Electronic Data
SEC Chair Mary Schapiro recently
announced that the EDGAR (Electronic
Data Gathering and Retrieval) system will
be replaced by a new system. EDGAR
was developed in the 1980s to store public company filings, such as 10-Ks and
10-Qs. The EDGAR system is a textbased document system, which makes it
difficult to retrieve individual pieces of
data from the stored financial information. The SEC’s new IDEA (Interactive
Data Electronic Applications) system will
be data-based, allowing users to search
and retrieve data items, such as revenue
or retained earnings. The new IDEA system will place electronic XBRL tags
around data items so that they can be efficiently searched and retrieved for financial analysis. Because XBRL and XML
are open source systems, they are free
of license fees. In addition, XBRL is
extensible so companies can modify the
basic taxonomy (with XML) to fit their
needs.
The uses of such technologies are
numerous. Auditors can use these skills to
quickly look at benchmarking data and use
during analytical procedures within an
engagement. This can also be helpful when
analyzing companies as potential investment and acquisition targets. The advantages of XBRL are manifold. For example, automatic tagging of data and information is now available with accounting
software, database, and enterprise systems.
With XBRL, analysts can drill down to the
transaction level from the financial reports.
Another advantage is quicker and more
periodic reporting capabilities, as well as
real-time reporting and auditing.
With the recent SEC mandate for the
500 largest publicly held companies to use
XBRL, the data is there. Accordingly, CPAs
must learn how to work with, and profit
❑
from, this new form of information.
Thomas Tribunella, PhD, CPA, is an
associate professor of accounting and
information systems in the school of business, State University of New York at
Oswego, Oswego, N.Y. Heidi Tribunella,
MS, CPA, is a senior lecturer in accounting at the Simon Graduate School
of Business Administration, University of
Rochester, Rochester, N.Y.
72
MARCH 2010 / THE CPA JOURNAL