Briefly answer these questions:

• Do we have any reason to suspect or not trust a firm's financial statements? Is there a possibility that any aspects of a firm's financial statements may not reflect the underlying economic and business realities of the firm?
• Can a firm's financial statements be trusted as an aid in helping us understand how a firm adds value?

A Firm's Strategy:

• What is a firm's strategy? Briefly describe some important strategies a firm uses.
• How can a firm's strategy adds value to the company?

Assessing Strategies:

• How does a company assess its strategies? (Hint: What are the factors to be considered in assessing a firm's strategies?)
• Explain the two factors in assessing a firm's strategies below:

1. The firm's competitive environment:
2. How well positioned is the firm within its competitive environment:

Five P's Strategy:

• Explain and give an example of a situation describing how each Five P's strategy below are implemented:

1. Plan:
2. Ploy:
3. Pattern:
4. Position:
5. Perspective:

Judging Accounts/Financial Statements (Determine whether or not to trust them):

• What are the key aspects of a business that the financial statements leave out?
• Discuss the two aspects below:

1. Its ability to generate Positive Net Present Value (NPV) investments in the future:
2. The opportunity cost of its activities, or in other words, the cost of capital:

• Discuss the areas that management use to evaluate a firm's financial statements (if they are to be trusted or not) below:

1. Level of allowance for doubtful debts:
2. Selection of depreciation rates;
3. Recognition of revenue:
4. Basis for revaluation of properties:

Conclusion: