A finance student states, “I don’t understand why anyone pays any attention to accounting earnings numbers, given that a ‘clean’ number like cash from operations is readily available.” Do you agree? Why or why not?
Answer to relevant QuestionsFred argues, “The standards that I like most are the ones that eliminate all management discretion in reporting—that way I get uniform numbers across all companies and don’t have to worry about doing accounting ...A fund manager states, “I refuse to buy any company that makes a voluntary accounting change, since it’s certainly a case of management trying to hide bad news.” Can you think of any alternative interpretation?As the CFO of a company, what indicators would you look at to assess whether your firm’s long-term assets were impaired? What approaches could be used, either by management or an independent valuation firm, to assess the ...Joe Investor asserts, “A company cannot grow faster than its sustainable growth rate.” True or false? Explain why.What factors are likely to drive a firm’s outlays for new capital (such as plant, property, and equipment) and for working capital (such as receivables and inventory)? What ratios would you use to help generate forecasts ...
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