BU127 Chapter Notes - Chapter 13: Efficient-Market Hypothesis, Dividend Yield, Current Liability
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BU127 Full Course Notes
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Of people who use financial statements, current and potential investors are perhaps single largest group often rely on advice of professional analysts. Economy wide factors: overall health of economy has direct impact on performance of individual business. Investors must consider data like unemployment rate, general inflation rate, and changes in interest rates. E. g. increases in increase rates often slow economic growth b/c consumers are less willing to buy merchandise on credit when interest rates are high. Industry factors: certain events have major impact on each company within industry, but only minor impact on other companies outside industry. E. g. major drought will be devastating for food-related industries but no effect on electronics industry. Individual company factors: learn as much about the company as possible; good analysts don"t rely solely on info from financial statements. Roe shows logical relationship among 3 ratios.
