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Assume This Is Your First Day on the Job as the New

question 57

Essay

Assume this is your first day on the job as the new chief financial officer of a midsize company.Identify the three key ratios that you would compute first as you begin to try to understand the financial status of the firm.Explain why you selected the three ratios that you did.


Definitions:

Confirmation Bias

The inclination to seek out, understand, prefer, and remember information in a manner that validates one's existing beliefs or theories.

Cognitive Error

Faulty thinking patterns that lead to misinterpretation of experiences or interactions.

Illusory Correlation

The cognitive mistake of perceiving a relationship between two variables even when none exists.

Confirmation Bias

The tendency to search for, interpret, and remember information in a way that confirms one’s preconceptions or hypotheses.

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