1、1 本科毕业论文（设计） 外 文 翻 译 外文出处 Journal of Intellectual Capital 外文 作者 Ram S. Sriram 原文 ： Relevance of intangible assets to evaluate financial health 1、 Asset composition relevance to financial health evaluation Technology firms differ from traditional firms both in their internal and external environments
2、. Unlike traditional manufacturing or retail firms, technology firms may not offer tangible products for sale. Compared to traditional firms, technology firms are relatively younger and would not have a long history of management. On the average, technology firms own relatively fewer physical assets
3、 than their traditional manufacturing counterparts. They derive future economic benefits primarily from the strength of their intangible assets patents, research and development, human resources, or knowledge-bases. Since these intangible assets take long time to develop, their ability to contribute
4、 to the bottom line profits of a technology firm would also take a long time. Consequently, in the initial years of a technology firm, the earnings, profitability, or return on assets would be low and using these indicators to assess their financial strength is likely to lead to misleading conclusio
5、ns. A primary assessment of a technology firms strength could be derived only from the value of the intangible assets that it owns. However, such values are rarely reported in published financial statements. The principal reason that published financial statements do not report intangible asset valu
6、es is because, measuring the value of these assets is subjective and is prone to measurement errors. Intangible assets do not fit the definition of an “accounting asset” and reporting their monetary worth is likely to provide unreliable information to investors. But, regardless of whether such value
7、s are reported in published financial statements or not, investors do seem to consider the strength of these assets when 2 making investment decisions. They infer the value of the intangible assets owned by a firm by observing the data on market capitalization of a firms stock. For example, a few ye
8、ars ago, when Dell Corp. implemented a well-working supply chain system, the markets recognized the intangible value of the supply chain to Dell by making adjustments to the market value of Dells stocks. Analysts and others caution that market capitalization of a firms stock is not a true reflection
9、 of a firms intangible asset values and investors must use prudence while using such subjective values. While conceding that market capitalization is subjective and must be used with caution, we must acknowledge that it nevertheless helps a technology firm with high-market capitalization to obtain m
10、uch needed equity from the market. We must also recognize that while high-market capitalization may help a firm with raising equity, market capitalization data may not necessarily be a reflection of the long-term financial stability of a firm. Long-term financial stability depends not only on the ab
11、ility to raise equity but also on the ability to effectively and efficiently manage a firms assets tangible as well as intangible assets. Therefore, the long-run value of any asset, whether it is tangible or intangible would depend on an assets ability to provide future benefits and its ability to i
12、nfluence future financial performance. To most investors, evidence of future benefits and performance are indicated by growth in revenues, profits, and repayment of debts. Currently, investors can find such performance indicators only by analyzing the data reported in published financial statements.
13、 The premise of this discussion is that, while a markets perception of intangible assets is relevant for short-term pricing of a stock； it should not be used to evaluate long-term financial health. While perception gained from market capitalization of a stock could be used to supplement the assessme
14、nt of long-term financial health, the primary data for such evaluation should come from fundamental financial indicators culled from published financial statements. Therefore, this study uses a financial distress model that uses fundamental financial indicators supported by surrogates for intangible
15、 assets owned by a firm to assess financial health of a firm. The study also examines a secondary question: whether such intangible asset surrogates are more 3 relevant when examining a firm with significant intangible assets in its portfolio than when evaluating a firm with greater proportion of it
16、s assets in tangible, physical assets. The study expects to contribute by highlighting the relevance of both publicly available information and subjectively-measured asset values when evaluating financial health. 2、 Understanding firm failure financial distress models While there is no consensus on
17、the relationship between financial performance and health, there is agreement that business failure causes losses to creditors and stockholders. Since investors mostly rely on accounting disclosures to assess financial health, researchers have been using published accounting data when building finan
18、cial distress models. Published accounting data is also useful because it is measured objectively and it evolves from acceptable and recognized accounting practices. An advantage of using financial ratios is that they surrogate for important attributes of a firms financial condition such as liquidit
19、y, solvency, or profitability. In the past, almost all the bankruptcy studies used only traditional manufacturing firms as their sample subjects. The benefit of using such a sample is that these firms were from established industries with traditional business models. Consequently, using performance
20、measures such as current ratio, debt to equity ratio, return on assets and other ratios that surrogate for liquidity, solvency, or profitability made sense and the ratios provided reliable signals of financial health. But, whether such ratios are also appropriate when evaluating a technology firm th
21、at mostly offers services and whose assets are primarily intangible assets in nature, is not evident. The products and ervices offered by a technology firm requires heavy customization and years of development before the products and services generate viable revenues. In this scenario, using only tr
22、aditional parameters such as revenues and profits reflecting past performance and ignoring future potential is unlikely to reveal the complete financial status of technology firms. The principal reason why prior studies used financial ratios to evaluate financial strength is because, such ratios pointed out whether: . a firm has a feasible business model； and
