What are discretionary expenses? What is the importance of discretionary expenses for analysis of earnings quality?
Answer to relevant QuestionsWhat is the relation between the reported value of assets and reported earnings? What is the relation between the reported values of liabilities, including provisions, and reported earnings?What factors and incentives motivate companies (management) to engage in earnings management? What are the implications of these incentives for financial statement analysis?Define income. Distinguish income from cash flow.Describe the role that accrual accounting information and cash flow information play in your own models of company valuation.Analysts produce forecasts of accounting earnings along with other forward-looking information. This information has strengths and weaknesses versus financial statement information.Required:a. Discuss whether you believe ...
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