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The XML Financial Analysis Lifecycle

The XML Financial Analysis Lifecycle. RIXML+XBRL Demonstration Project. RIXML+XBRL Demonstration Project. XML-based project combines RIXML research document information “header” file with an XBRL “resource” file.

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The XML Financial Analysis Lifecycle

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  1. The XML Financial Analysis Lifecycle RIXML+XBRL Demonstration Project

  2. RIXML+XBRL Demonstration Project • XML-based project combines RIXML research document information “header” file with an XBRL “resource” file. • Project shows how all stages of financial analysis lifecycle can be greatly improved with XML tagging • “Real World” use case demonstration with existing systems ready to be used in practice.

  3. RIXML and XBRL Organization Analysis Lifecycle Project Participants

  4. Proprietary Database Coding Investor Relations / Filing Prep Earnings Release Internet Browser XBRL Reader Analyst Spreadsheet Model RIXML Research Report Spreadsheet Application Financial Report Analysis Lifecycle Publishers Preparation XBRL Reports Distribution Buy-Side Consumption SEC Filing Form Public Company EDGAR Newswire Sell-Side Research House Data Service Provider

  5. Proprietary Database Coding Investor Relations / Filing Prep Earnings Release Internet Browser XBRL Reader Analyst Spreadsheet Model RIXML Research Report Spreadsheet Application Our Path Through the Lifecycle Publishers Preparation XBRL Reports Distribution Buy-Side Consumption START SEC Filing Form Public Company EDGAR Newswire Sell-Side Research House Data Service Provider END

  6. Company uploads text Earnings Release, XBRL version, or both, directly to newswire Publishing an Earnings Release

  7. Still a Bit of Human Contact for Confirmation… I’m calling to confirm that you submitted a news release via PRN Direct. Yes, I did. Thanks for checking.

  8. Releases are coded for distribution by industry, author, subject, etc. Earnings Release Is Coded for Distribution

  9. The text Earnings Release is combined with a XBRL file and coding and distributed in multiple formats to reach investors, analysts and financial media XBRL text coding Earnings Release Distribution Institutional investors XBRL only Immediate release or queued for timed distribution Individual Investors XBRL and text Financial Media Wire Services Text only

  10. While a Text-Only Earnings Release Can Only Be Read…

  11. … a XBRL Earnings Release Is Completely Interactive with a Customizable Display.

  12. Earnings release financial statement line items are individually tagged for advanced analysis … XBRL Earnings Releases Can Be Analyzed in Line by Line Detail …

  13. … Allowing for Close Investigation of Revenue Sources and Earnings Quality … • Earnings can be instantly adjusted by any user criteria and easily visualized.

  14. Earnings release results can be compared in detail against other reports for the same company or its competitors. … And Automatic Comparison Against Other Reports Published in XBRL.

  15. XBRL Also Allows for Much More Comprehensive Valuations to Be Automatically Updated …

  16. XBRL tagged information can also be exported into spreadsheets for customized analysis incorporating information from other data sources … And for Financial Statements to Be Exported Into Spreadsheets for Further Analysis

  17. Buy-Side Analyst – A Day in the Life • Tremendous benefits of an XBRL tagged release • Receive Earnings Release moments after publication • Data is available in Excel moments after receipt • No time spent on the gathering and data entry

  18. Buy-Side Analyst – A Day in the Life • Actionable data within moments • Compare new actuals with historical financials • Look for surprise vs sell side estimates • Review new valuations with real time market data

  19. Buy-Side Analyst – A Day in the Life • Spend more time reviewing the data • Quickly update valuation and analysis and compare results against estimates

  20. Benefits of XBRL to Sell-Side Analyst • Tremendous benefits of an XBRL tagged release • Receive Earnings Release moments after publication • Data is available in Excel moments after receipt • No time spent on the gathering and data entry • Produce a well developed earnings model incorporating new information • Publish a research report as timely as possible • Distribute research to clients using high value added and easily digestible RIXML+XBRL formats

  21. Data Service Providers Use RIXML Content to Provide Their Users With Detailed Search Criteria • Buy side analysts can search research for … Targeted Themes Quantitative Equity based research for Technology industry Precise Initiate coverage on a stock I follow Action Related Reports focused on estimate upgrade/downgrade

  22. What is RIXML? • An open industry standard that provides for extensive metadata tagging to any piece of investment research, in any form or media, with significant detail for end users to quickly search, sort and filter aggregated research • The indexing that describes the content and context of the document, not the document itself • A standardization of terms and rules that enables clear description of investment research data

  23. Benefits of the RIXML Standard • Increases the efficiency of distribution to publish research directly or indirectly to consumers • The RIXML specification supports multi-language and any media type • Multiple tags are allowed and primary indicators are provided for many values • Identifies research relevant to a user’s profile through the sorting and filtering of standardized, co-mingled data from various sources

  24. Information Architecture Approach In RIXML: • Content = Product • Metadata is broken into key “packages” that describe the product • Each “package” contains information designed to describe a specific aspect of the content Content • Any published content, in any format for investment research Metadata • Any information describing the content • This “wrapper” allows the content to be transported with all information necessary for a system or user to know what it is about

  25. RIXML can be used to distribute and provide content information for a variety of research “resource” file types such as .pdfs, spreadsheets, and xbrl documents. RIXML+XBRL files are distributed by sell-side investment research houses through research data service providers using the same header file plus resource file method currently used. RIXML Header is Combined with XBRL Resource File for Distribution RIXML (control file) Data Service Providers (FactSet, Reuters, First Call, etc) Institutional investors PDF, XLS or XBRL (resource file)

  26. Sell-Side Equity Analyst Process • Model Update • Incorporate financial results from news release into analysis and forecasting model • Compare results with forecasts • Analyze new metrics and review valuations • Confirm investment recommendation and publish research to inform clients of conclusions Company results announced Financial model updated Analysis Conclusions

  27. Sell-Side analyst can quickly and automatically incorporate results into forecast models without manual re-entry Sell-Side Analyst Incorporation of Earnings Release into Forecasting Models

  28. XBRL: A Major Advance in Financial Reporting • HTML or PDF renditions of reports only exploit the ease of distribution that the Internet offers • In practice they are of little more value than a photocopied press release • XBRL will allow accurate, relevant, scalable querying of financial information Conclusion: Complex information can be turned into simple knowledge!

  29. XBRL Analysis Workflow Regulatory Filings Analysts XBRL • Multiperiod estimates • Risk profiles • Management assessments SEC FactSet PR Newswire … XBRL Integrated Models RIXML/XBRL XML/XBRL Economic XBRL Supply Chain Customers Buy Side/Investors Internet Data Purveyors Source: Morgan Stanley Research

  30. Quick Comments Immediate response to earnings releases Time pressure restricts the level of analysis Detailed Analyses More detailed analysis of filings Routine reports should be easier to complete Use Case: Updating Financial Models Source: Morgan Stanley Research

  31. Current Workflow: Report published to the web in HTML or PDF format Analyst manually transcribes numbers into spreadsheet model and… …analyses results quickly in order to get a comment out Workflow: Updating Financial Models Process with XBRL: • Report published in XBRL format • Numbers automatically loaded into spreadsheet by an Excel add-in • Analyst has more time to analyze results with confidence Company results announced Financial model updated Analysis Conclusions

  32. Operating Leases: What is Real Debt/Credit Risk XBRL Filings Can Also Be Incorporated Into High-End Proprietary Database/Analysis Systems 16,000 14,000 12,000 10,000 8,000 Millions of $USD 6,000 4,000 2,000 - (2,000) Winn Dixie Stores FedEx Corp. UPS Walgreens Deutsche Post Cathay Pacific World Net Airways Estimated Net Reported Debt Net Debt including Operating Leases Available in ModelWare Sources: Company reports, Morgan Stanley Research

  33. Why XBRL for Financial Analysis • Accuracy • Greater confidence in numbers used for analysis • Reliable results in higher quality conclusions • Timeliness • More time to focus on analysis, not process • Shorter “time to market” • More frequent high-quality analysis • Other Points to consider… • Research model changing • Information and Knowledge are two separate things • Numbers aren’t everything; context matters too • We need more companies to report using XBRL

  34. RIXML+XBRL Results in More Detailed, Timely and Value-Added Reports • RIXML+XBRL greatly benefits both the Sell-Side and the Buy-Side of Wall Street • Sell-Side analyst is can work much more quickly in greater detail with XBRL earnings releases and provide a better recommendation and research product to their buy-side clients using combination of RIXML+XBRL • Buy-Side clients are able to search sell-side research using much finer RIXML criteria to find a much useful and actionable XBRL research

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