John, who has just completed his first finance course, is unsure whether he should take a course in business analysis and valuation using financial statements, since he believes that financial analysis adds little value, given the efficiency of capital markets. Explain to John when financial analysis can add value, even if capital markets are generally seen as being efficient.
Answer to relevant QuestionsIn 2009, Larry Summers, former Secretary of the Treasury, observed that “in the past 20-year period, we have seen the 1987 stock market crash. We have seen the Savings & Loan debacle and commercial real estate collapse of ...What are the critical drivers of industry profitability? Explain why you agree or disagree with each of the following statements:a. It’s better to be a differentiator than a cost leader, since you can then charge premium prices.b. It’s more profitable to be in a ...The conservatism principle arises because of concerns about management’s incentives to overstate the firm’s performance. Joe Banks argues, “We could get rid of conservatism and make accounting numbers more useful if we ...The cigarette industry is subject to litigation for health hazards posed by its products. The industry has been in an ongoing process of negotiating a settlement of these claims with state and federal governments. As the CFO ...
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