answer with clarity to all parts of the questions. Discuss your approach to an a
ID: 2620346 • Letter: A
Question
answer with clarity to all parts of the questions.
Discuss your approach to an accurate and meaningful analysis of a firm's financial reports. You must make two substantial posts in the discussion in order to qualify for a grade DO1 Financial Statement Analysis What are some of the key elements of valuing common stocks? What are the most critical and why? Remember you need at least 2 substantial discussion posts to qualify for a grade DO2 Stock Valuation What is the value to the firm of a well- prepared capital budget? Why do firm:s need them? At least 2 substantial posts are needed to qualify for a grade DO3 Capital Budgeting What are the key considerations used by the CFO in determining how to finance the firm's long term investment and asset growth.? You need at least 2 substantial posts to qualify for a grade DO4 Financing the Firm's ActivitiesExplanation / Answer
Answer 01) Financial statement analysis : Financial Statement Analysis is a taditional and systematic rmethod of reviewing and analyzing a firm’s annual accounting reports (financial statements) to understand its past, present or projected future business performance. This process of studying the complete financial statements allows for better economic decision making.The main objective of such analysis is to use past performance information of the company in order to predict future performance. The methods are : Horizontal Analysis , Vertical Analysis and Ratio analysis.
Answer 02) The Common Stock Valuation is process to find the intrinsic value or fundamental value of shares of a company based on the data. There are different models to find the intrinsic or "true" value .The value of stock depend on dividends, cash flow and growth rate for a single company.
Some of the most used Valuation models include the discounted cash flow model, dividend discount model,asset-based models and residual income models.
The most critical elements are Dividends , grwoth rate of company , residual income and leverage ratio.
Answer 03) Capital budgeting of a company is a formal process mainly used to evaluate the potential expenditures and /or investments with a significant amount. It provided detail about how to invest the current accumulated funds for addition, disposition, modification or replacement of fixed assets for better return in future.
Features of CAPITAL BUDGETING
Since, the capital budget provide the detail of cash flow in future , which is utilized to calculate the value of equity shares of the company.
Answer 04) The key considerations used in determining the long term investment and asset growth are
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