[ACTG 3000] - Final Exam Guide - Everything you need to know! (24 pages long)
Document Summary
Cash flow analysis: does not drive enough value; value is driven from profitability and growth, which is shown in ratio analysis. If there are liquidity problems, then we focus on cash flow analysis. We need to understand what type of profitability the firm has, and what current strategies will change the profitability picture. We need to learn more about the business when we identify our value drivers for growth. When doing our forecast, refer back to the ratio analysis. If you are an engineer, you are really good at this. If you are finance-oriented or cfa, you are good at this. *if you are an accountant, you are usually good at both product market and financial market strategies, and you can be a good cfo. All of these will be reflected in your ratios. If roe is less than cost of equity, then you are destroying value.
