Objectives of Financial Statements Analysis

Managers, investors, and leaders analyze financial statements to identify an

organization’s financial strengths and weaknesses. Although financial
statements are essentially historical documents and they tell what has
happened during a particular period of time, most users are concerned about
what will happen in the future.

Current shareholders or owners are concerned about their investment income

as well as about the company’s overall profitability, stability and sound capital
structure necessary for continued successful operations. Potential investors
are interested in ‘‘sold’’ companies, ones whose financial statements indicate a
trend for financial flexibility, rapid growth and diversification lines of
business. Short-term creditors are interested in a firm’s short-run liquidity, its
ability to pay current obligations as they mature. Long-term creditors are
concerned about the long-term security of their interest income and the
company’s ability to maintain successful earnings and cash flows to meet
continuing financial commitments.

Despite the fact that financial statements are historical documents, they can
still provide valuable information bearing on all of these concerns.

General Approach to Financial Statements Analysis

A general approach to financial statements analysis will cover the broad areas
given below. In addition, each analytical situation should be tailored to meet
specific user objectives.

1. Background study and evaluation of firm industry, economy, and

outlook

Since economic developments and the actions of competitors affect the

ability of any business enterprise to perform successfully, it is necessary
to start the analysis of a firm’s financial statements with an evaluation of
the environment in which the firm conducts business.
2. Short-term solvency analysis
This refers to the analysis of the company’s ability to meet near-term
demand for cash and normal operating requirements. Some of the
indications that a company enjoys a satisfactory short-term solvency
position are:
a. Favorable credit position
b. Satisfactory proportion of cash to the requirements of the current
volume
c. Ability to pay current debts in the regular course of business
d. Ability to extend more credit to costumers
e. Ability to replenish inventory promptly
3. Capital structure and long-term solvency analysis
This pertains to the evaluation of the amount and proportion of debt in
a firm’s capital structure to assess its ability to service debt. This will
also cover the analysis of the use of financial leverage to maximize the
returns to the owners. A company is generally considered enjoying
satisfactory long-term financial position if it is able to
a. Maintain a well-balanced relationship between borrowed funds and
equity.
b. Effectively employ borrowed funds and equity.
c. Declare satisfactory amount of dividends to shareholders.
d. Withstand adverse business conditions.
e. Engage in research and development to provide new products or
improve old products, method or processes.
f. Meet their commitment to borrowers and owners.
4. Operating Efficiency and Profitability analysis
This involves the evaluation of how well assets have been employed by
management in terms of generating revenues and maximizing returns
on such resources. Some indicators of managerial efficiency in the use of
the resources are:
a. Ability to earn a satisfactory return on its investment of borrowed
funds and equity
b. Ability to control operating costs within reasonable limits.
c. Optimum level of investment in assets.
5. Other considerations
QUALITY OF EARNINGS. The assessment of earnings quality is critical in
the analysis of financial statements. The income statement encompasses
many areas that provide management with opportunities to influence
the outcome of reported earnings in ways that may not best represent
economic reality or the future operating potential of a firm.

What are some of the reasons that would push managers to manipulate
reported earnings? These reasons which are briefly explained are:
1. Meet Internal Earnings Target
Earnings target represents an important tool in motivating managers to
increase sales efforts, control costs and use resources more efficiently.
However, internal bonuses which are based on earnings contribute to
the incidence of earnings management. Managers are more likely to
manage earnings upward if they are close to bonus threshold and are
also more likely to manage earnings downward if reported earnings are
substantially in excess of the maximum bonus level.
2. Meet External Expectations
Watching and listening to CNN and BBC business news, one would
observe that when actual net income of an enterprise is announced
and it is less than the income forecasted by management or even
analysts, a drop in stock price would surely follow. As a result,
companies have the tendency to manage earnings to make sure that
the announced number is at least equal to the earnings expected by
analysis.
3. To Even-out Income
The practice of carefully timing the recognition of revenues and
expenses to even out the amount of reported earnings from one year
to the next is called income smoothing. By showing that a company
appears to be less volatile, income smoothing can make it easier for a
company to obtain a loan or favorable terms and easier to attract
investor.
4. Provide ‘‘window dressing’’ for an IPO or a Loan
 ‘‘Window dressing’’ are measures taken by management to make the
company appear as strong and profitable as possible in its statement
of financial position, income statement, and cash flow statement . A
study of IPO’s done in china found some enterprises manipulating
earnings in advance of shares of the company being sold to the
public. Reverse window dressing could also be committed by
enterprises who would want to obtain government subsidies or
exemptions from tariff and taxes.

What are some of the most common techniques used to manage

earnings?
These techniques include:

(1)Strategic Matching

This involves timing its transaction so that large one-time gains and losses
occur in the same period resulting in a smooth upward trend in reported
earnings. It could also involve extra efforts to ensure certain transaction are
completed quickly or delayed so that they are recognized in the most
advantageous quarter.

(2) Change in methods or estimates with little or no disclosure

Companies often change accounting estimates regarding bad debts return or

pension funds, depreciation lives, interest rate used in recording sales-type
leases without describing the change in the notes to the financial statements.
Some users evaluate the reported earnings under the incorrect assumption
that the results are compiled using a consistent set of accounting methods and
estimates and could therefore be compared to prior-year results meaningfully.

(3) Departure from accounting standards

One of the often-used techniques in managing earnings to show more

favorable result is ‘‘fraudulent reporting’’ or deliberate violation of accounting
rules. Examples are (1) intentional capitalization or deferment of
expenditures that should have been expensed, (2) non-provision of losses due
to uncollectibility of receivables or (3) failure to recognize impairment losses
on plant, property, and equipment.

(4) Fictions Transactions

This technique could involve deliberate recording of non-existent revenue

transactions and costumers or reporting sales when contracts are not fully
completed and goods not yet delivered. The exercise of judgment inherent in
the accrual process gives desperate managers the ability to accelerate or defer
the reporting of profit to best suit their purpose.

This list of techniques is indeed a very short and limited one. But it still is a
useful starting point to see how companies attempt to manage earnings.

In assessing the quality of a company’s reported earnings, it is helpful to

consider not only the issues presented but also any other factors the analyst
believes may cause the reported earnings figure to misrepresent the future
operating potential of the firm.

Comparable adjustment would also be required for previous year’s earnings

figures in order to make relevant comparison.

The ultimate objective in the analysis of the earnings quality is to arrive at a

performance measure which best reflects both financial of the company.

For example, to arrive at the appropriate earnings for an entity, starting, from
the bottom line net income, at a minimum the following adjustments should
be considered:

Start with total income before taxes Pxx

Add (Deduct)

Gain on disposal of assets (if any) (xx)

Excess of share in equity income over dividends received (xx)
Unrealized gains on investors in trading /
available-for-sale securities (xx)
Provision for estimated shutdown costs (xx)
Research and development costs xx
 Impairment loss on fixed assets xx
Gain on early extinguishments of debt (xx)

Adjusted income from normal operations Pxx

QUALITY OF ASSETS AND RELATIVE AMOUNT OF DEBT. Although a

satisfactory level of earnings maybe a good indication of a company’ s long-
run ability to pay its debts and dividends, a financial analyst or user must look
at the composition of assets, their condition and liquidity, the timing of
repayment of liabilities and the total amount of debt outstanding.

One may observed that a company may be profitable and yet be unable to pay
its liabilities as they mature; revenues and earnings per year satisfactorily, but
plant and equipment may be deteriorating because of poor maintenance
policies; valuable patents and franchises may be experiencing; substantial
losses may be imminent due to slow-moving inventories and past-due
receivables.

Companies with large amounts of debt often are vulnerable to increases in

interest rates and to even temporary reductions in cash inflows.

One should also consider the fact that during a period of significant inflation,
financial statements prepared in terms of historical costs do not reflect fully
the economic resources or the real income (in terms of purchasing power) of a
business enterprise. Although it is recommended that companies include in
their annual reports supplementary schedules showing the effects of inflation
on their financial statements, some do not comply for the reasons that it is not
mandatory and it involves high cost of developing these statements.

TRANSPAREN FINANCIAL REPORTING: THE BEST PRACTICE. The more

reliable the economic information provided by a company through the
financial statement, the more confidence potential investors can place in that
information. It also allows better decision making that reduces the risk to
potential investors and creditors thereby lowering the company’s cost of
capital. Likewise, a good managerial accounting system allows manager more
efficient access to the information needed to make good business decisions.
Users of financial statements must therefore be cognizant of the probability
that some financial data may be however, intentionally manipulated.

If management is trying to deceive potential investors, lenders, regulatory

agencies, employees, or other company stakeholders, then fraudulent
financing reporting poses a real risk of lost credibility in the future. There is
one important item that should be considered–most people believe that
intentionally trying to deceive others is wrong, regardless of the economic
consequences.

Many businessmen are asking why accounting scandals continue to occur

even when we have high–quality accounting and auditing standards
supplemented by an active regulatory system.

The answer to this question is basic: Managers have strong economic

motivations to report favorable financial results and these incentives can lead
to deceptive or fraudulent reporting. But there are also managers who have
strong incentives to maintain a reputation for credibility for both their
companies and for themselves personally.

Transfer financial reporting even in a scenario in which there are great

motivations for managers to manipulate earnings in the short run, represents
the best business practice for the long run.

Steps in Financial Statements Analysis

In analysis financial statements, the following steps may be followed:

1. Established objectives of the analysis.

2. Study the industry in which firm operates and relate industry climate
to current and projected economic development.
3. Develop knowledge of the firm and the quality of management.
4. Evaluate financial statements using any of the techniques below.
a. Horizontal Analysis of Comparative Statements ( Increase-
Decrease Method)
b. Trend percentages
 c. Common size financial statements
d. Financial ratios

The major areas that may be covered in the analysis are:

a. Short-term solvency
b. Capital structure and long-term solvency
c. Operating efficiency and profitability
d. Segmented analysis (when relevant)
5. Summarize findings based on analysis and reach conclusions about
firm relevant to the established objectives.

Limitation of Financial Statements Analysis

Although financial statement analysis is a highly useful tool the analyst should
consider its limitations. The limitations involve the comparability of financial
data between companies and the need to look beyond ratios. These
limitations are:

1. Information derived by the analysis are not absolute measures of

performance in any and all of the areas of business operations. They
are only indicators of degrees of probability and financial strength of
the firm.
2. Limitation inherent in the accounting date the analyst works with.
These are brought about by among others: (a) variation and lack of
consistency in the application of accounting principles, policies and
procedures, (b) too-condensed presentation of data, and (c) failure to
reflect change in purchasing power.
3. Limitations of the performance measures or tools and techniques used
in the analysis. Quantitative measurements are not absolute measures
but should be interpreted relative to the nature of the business and in
the light of past, current and future operations. Timing of transactions
and the use of averages can also affect the results obtained in applying
the techniques in financial analysis.
 4. Analyst should be alert to the potential for management to influence
the outcome of financial statements in order to appeal to creditors,
investors, and others.

Limitations of analysis may be overcome to some extent by finding

appropriate benchmarks against which to measure a company’s performance.
The benchmarks used by most analyst are the performance of comparable
components and the average performance of several companies in the same
industry

HORIZONTAL ANALYSIS OF COMPARATIVE STATEMENTS ( INCREASE –

DECREASE METHOD)

A good place to begin in financial statement analysis is to put statements in

comparative form. Significant changes in the financial data are easier to see
when financial statement amounts for two or more years are placed side by
side in adjacent columns. Year-to-year comparisons for the same company
are useful especially if reported changes are expressed in percentages. The
study of percentage changes in comparative statements requires two steps,
namely:

1. Compute the peso amount of the change from the base (earlier)
period to the later period, and
2. Divide the peso amount of change by the base-period amount. This
is not done however, if the base year figure is negative or zero.

Illustrative Problem 4.1. Increase (Decrease) Method of Analysis

Comparative statements of Financial Position showing the Year-to-year

Changes in Peso Amounts and Percentages of Golden Garments, Inc. follow:

 Golden Garment
Comparative Statement of Financial Position

December 31, 2014-2013

Increase ( Decrease )

2014 2013 Amount Percent

Assets

Current assets

Cash P 70,392 P 68, 250 P 2,142 3.1

Amounts receivable (net) 218,549 184,978 33,571 18.1
Inventory 223,242 197,097 26,145 13.3
Prepaid expenses 67,710 76,542 (8,832) (11.5)
Total current assets 579,893 P526,867 P53,026 10.1

Plant and equipment

Plant and equipment (net) 90,503 110,987 (20,484) (18.5)

Total assets P670,396 P637,854 P 32,542 5.1

Liabilities and equity

Current liabilities
Accounts payable P158,214 P139,135 P 19,079 13.7
Bank loans and other payables 71,672 56,769 14,903 26.3
Current portion of notes payable
30,000 30,000 -0- 0.0
Total current liabilities P259,886 P225,904 P 33,982 15.0
 Long-term liabilities
Note payable (11%) 139,000 169,000 (30,000) 17.8
Total liabilities P398,886 P394,904 P 3,982 1.0
Equity
Preference shares, P8 dividend,
P100 par P 70,000 P 70,000 P -0- 0.0
Ordinary shares, P1 par value 10,000 10,000 -0- 0.0
Additional paid-in capital 90,000 90,000 -0- 0.0
Total paid-in capital P170,000 P170,000 P -0- 0.0
Retained earnings 101,510 72,950 28,560 39.2
Total equity P271,510 P242,950 28,560 11.8
Total liabilities and equity P670,396 P637,854 P 32,542 5.1

Comparative Income Statements showing Year-to-Year Changes in Peso

Amounts and Percentages of Golden Garments, Inc. follow:

Golden Garments, Inc.

Comparative Income Statement
For the Years Ended December 31, 2014 and 2013

Increase (Decrease)
2014 2013 Amount Percent

Sales revenue P2,000,000 P1,801,000 P198,198 11.0

Expenses
Cost of goods sold P1,472,000 P1,309,910 P162,090 12.4
Selling 248,000 230,000 18,000 7.8
Administrative 138,000 142,000 (4,000) 2.8
Total expenses P1,858,000 P1,681,910 P176,090 10.5
Operating income P 142,000 P 119,892 P 22,108 18.4
Interest expense 27,907 29,270 (1,363) 4.7
Income before taxes P 114,000 P 90,662 P 43,471 25.9
Income taxes (35%) 39,933 31,718 8,215 25.9
Net income P 74,160 P 58,904 P 15,256 25.9
Dividends to preference
Shareholders 5,600 5,600 0 0
Net income remaining for
ordinary shareholders P 68,560 P 53,304 15,256 28.6
Dividends to ordinary
shareholders 40,000 32,000 8,000 25.0
Net income added to
retained earnings P 28,560 P 21,304 7,256 34.1
Retained earnings, beginning
of year 72,950 51,646 21,304 41.3
Retained earnings, end of
year P 101,510 P 72,950 28,560 39.2

REQUIRED:

Evaluate the company’s financial position and results of operations using the
Comparative Statements Analysis.

Solution: Financial Statements Analysis of Golden Garments, Inc.

Short-Term Solvency Analysis

As shown on the statement of financial position, the percentage of increase in

total current assets (10.1%) was lower than the percentage of increase in total
current liabilities (15%). It can be observed that accounts payable and bank
loans increased significantly. Accounts receivable and inventory increased at a
much higher percentage than the percentage of increase in Sales revenue
(11%). This indicates slower conversion of inventory and receivable to cash.
The changes mentioned resulted to the deterioration in the short-term
solvency position of the company as of the end of year 2014 compared with
year 2013.
Long-term Financial Position Analysis

The book value of property, plant and equipment declined because of the
depreciation provision of the year. Total liabilities increased by only 1%
whereas shareholders’ from borrowing and toward capital provided by
profitable operations. These changes can be viewed favorably because they
indicate strengthening of the long-term financial position by end of year 2014

Operating Efficiency and Profitability Analysis

Sales revenues increased by 11% while cost of goods sold increased by 12.4%.
This is unfavorable because this could indicate that the company was unable
to adjust the selling price of the goods commensurate to the increase in cost of
goods purchases of manufactured or it was unable to control the price factor
of its cost of sales. These changes resulted to the reduction in the gross profit
rate which is unfavorable. The 11% increase in sales was accompanied by a
7.8% increase in selling and administrative expenses, respectively. This is
favorable because this could indicate management’s efficiency in keeping
expenses within control.

On an overall basis, operating performance could be considered satisfactory

or favorable because of the lower increase in operating costs of 10.5% as
compared with the increase in revenue of 11% which resulted to an 18.4%
increase in operating income. Repayment of notes payable reduced interest
expense by 4.7%. Reduced interest expense together with higher operating
income before taxes by 25.9%.

TREND PERCENTAGES

Definition

Trend percentages are index numbers showing relative changes in financial

data resulting with the passage of time. Trend percentages state several
years’ financial data in terms of a base year.
Purpose

Information on how a company currently stands in relation to the past can be

readily obtained by converting certain selected data into percentages. Trend
percentages or relatives to the base year emphasize changes in the financial
and operating data between specific dates or periods and make possible a
horizontal analysis and study of comparative financial statement data.
Although two-year comparisons are useful, long-term comparisons are better
since special circumstances can distort a two-year comparison. For instance,
short-term borrowing just before year-end will increase current assets and
current liabilities. But if the borrowing is temporary, it may be insignificant to
long-term investors. Examining trends over a period of five to ten years is
usually more revealing.

Computation and Evaluation

1. In the comparative statements that choose the year to be used as the

base and convert the amount of each item to 100%. The “base year”
may be the earliest year involved in the comparison, the latest year or
any intervening year. Generally, the base year should be representative
of the normal operating activity of the firm.
2. Compute the percentage relationship that each statement item bears to
the same item in the “base year” by simply dividing each value by the
base year.
3. Compare the trends of related financial and operating data to form an
opinion as to whether favorable or unfavorable tendencies are reflected
by the data.

Also, by simply looking at the comparative statements, one can see that sales
maybe increasing every year. But how rapidly have sales been increasing and
have the increase in net income kept pace with the increases in sales? It is
difficult to answer these questions by looking at the raw data alone. The
increases in sales and the increases in net income can be put into better
perspective by stating them in terms of trend percentages.

Illustrative Problem 4.2. Financial Analysis using Trend Percentages

The Comparative Statements of financial Position and Income Statements of

Gilbert Company are given from 2010 to 2014.

Gilbert Company
Statement of Financial Position
December 31, 2010 to 2014.
(P000’s)

December 31
Assets 2010 2011 2012 2013 2014
Current Assets
Cash 56.4 117.2 118.0 148.4 166.8
Marketable securities 210.2 79.2 79.6 79.0 89.8
Trade Receivables, net 522.2 406.6 406.6 539.8 583.8
Inventory 394.4 439.2 483.8 536.6 506.8
Other current assets 121.4 101.0 10.32 104.2 70.4
Total current assets 1304.6 1143.2 1245.2 1408.0 1417.6
Land, building and
equipment, net 853.8 1364.4 1380.8 1430.2 1440.2
Other assets 8.6 221.0 324.6 318.8 349.6
Total assets 2167.0 2728.6 2950.6 3157.0 3207.4
Liabilities and Equity
Current Liabilities
Accounts payable 375.0 362.8 345.2 303.0 320.8
Notes payable 112.6 210.2 177.0 123.2 86.6
Other current liabilities 147.4 38.2 50.2 69.4 57.6
Total current liabilities 635.0 611.2 572.4 495.6 465.0
Long-term liabilities (4%) 325.0 523.0 481.0 457.8 401.0
 Total Liabilities 960.0 1143.2 1053.4 953.4 866.0
Equity
Share Capital (P100 par)
common 850.0 1050.0 1240.0 1240.0 1240.0
Capital paid in excess of
par value 140.0 240.0 320.0 320.0 320.0
Retained earnings 217.0 295.4 337.2 643.6 781.4
Total Equity 1207.0 1585.4 1897.2 2203.6 2341.4
Total Liabilities and Equity 2167.0 2728.6 2950.6 3157.0 3207.4

Gilbert Company
Income Statement
For the Years Ended December 31, 2010 to 2014
(P000’s)

2010 2011 2012 2013 2014

Net sales 1707.4 1719.6 2402.4 2682.6 2983.6

Cost of goods sold 1248.2 1255.4 1722.4 1928.8 2109.4
Gross Margin on sales 459.2 464.2 679.8 753.8 874.2
Operating expenses
Selling expenses 230.4 232.2 365.2 421.2 507.2
General and administrative
expenses 99.0 108.2 158.4 163.6 185.0
Total operating expenses 329.4 340.4 523.6 584.8 692.2
Operating income 129.8 123.8 156.2 169.0 182.0
Other income and expenses,
net (deduct) (20.6) (17.0) (26.4) (21.4) (15.0)
Income before taxes 109.2 106.8 129.8 147.6 167.0
Less: Income before taxes 51.2 53.4 65.0 53.8 62.6
Net Income 58.0 53.4 64.8 93.8 104.4
Additional Information:

(a) Market value per share of ordinary shares as of December 31,

2014, P285.00
(b) Dividend declared in 2014, P25, 800.
(c) Retained earnings account was credited in 2014 for a prior period
adjustment of P59, 200.
(d) Depreciation charges for 2014 amounted to P150, 000.

REQUIRED:

1. Compute the trend percentages for the Statement of Financial Position

and Income Statements from 2010 t0 2014.
2. Evaluate the company’s short-term solvency, long-term financial
position and profitability using the trend percentages obtained in No. 1.

Solution: Financial Statements Analysis of Gilbert Company using Trend

Percentages

Requirement 1: Computation of Trend Percentages

Gilbert Company
Statement of Financial Position and Income Statement Trend Percentages
2010 to 2014
_________________Trend Percentages_______________
2010 2011 2012 2013 2014

Statement of Financial Position Items:

Assets
Current Assets
Cash 100 208 209 263 296
Marketable Securities 100 37 38 38 43
Accounts Receivable, net 100 78 88 103 112
Inventory 100 111 123 136 128
Other Current Assets 100 83 85 86 58
Total Current Assets 100 88 95 108 109
Land, Buildings and Equipment,
net 100 160 162 168 169
Other Assets 100 2570 3774 3707 4065
Total Assets 100 126 136 146 148
Liabilities and Equity
Current Liabilities
Accounts Payable 100 97 92 81 86
Notes Payable 100 187 157 109 77
Other Current Liabilities 100 26 34 47 39
Total Current Assets 100 96 90 78 73
Long-term liabilities 100 164 148 141 123
Total liabilities 100 119 110 99 90
Share Capital 100 124 146 146 148
Capital paid in excess
of par value 100 171 229 229 229
Retained Earnings 100 136 155 297 360
Total Equity 100 131 157 183 194
Total Liabilities and Equity 100 126 136 146 148

Income Statement Items:

Net sales 100 101 141 157 175
Cost of good sales 100 101 138 155 169
Gross Margin on sales 100 101 148 164 190
Selling expenses 100 101 159 183 220
General and administrative
expenses 100 109 160 165 187
Other income (expense) 100 83 128 102 73
Net income 100 92 112 162 180
Requirement 2: Analysis and Evaluation
I. Short-term Solvency

a. Current assets increased by 9% while current liabilities decreased by

27% by 2014. The current financial position of the Gilbert Company
improved as reflected by the upward trend in total current assets
accompanied by the financial position is also indicated by the fact that
the current assets were 2.05 times the current liabilities as of December
31, 2010 and 3.05 times at the most recent date.
b. The trend data reveal that cash, receivables and inventory showed
upward tendencies over the years. The increase in receivables and
inventory is favorable because net sales increased at a faster rate. The
favorable tendency indicates that more effective credit, collection and
merchandising policies, could have been established and made effective.
The relatively smaller amount of trade receivables reflects more rapid
turnover of customer accounts and possibly a large increase in cash
sales.
c. The decline in marketable securities and other current assets over the
years also indicates lesser investment in not-so-productive assets. All
these trends in different directions reflect an increasing efficiency of
working capital management.

II. Long-term financial position

a. A comparison of the trends in total liabilities and equity reveals that

the former declined and the latter increased. As a result of these
variations, the creditor’s margin of safety increased significantly.
b. The expansion in property, plant and equipment which substantially
increased was financed by shareholders’ capital through the issuance
of share capital at a premium, lone-term liabilities and working
capital derived from operations.
c. A greater reliance on equity funds rather than on creditor funds
increased the margin of safety of the creditor and therefore
strengthened the financial position of the company.
III. Profitability

a. It still is observed that both sales and cost of sales showed

upwards trends with sales increasing at a faster rate. These data
reflect a favorable situation from the point of view of managerial
ability to control costs relative to change on sales volume. This
more desirable percentage may have been the result of one and
more factors such as favorable price-level changes, more affective
markup policies or greater efficiency in purchasing.
b. An unfavorable tendency reflected by the fact that trend
percentages for selling general and administrative expenses
increased at a faster rate than the net sales. The company could
have earned more profit it better and more effective control over
operating expenses were instituted.