Financial Statement Analysis Should Be Included in Investment Analysis Because

question 87

Multiple Choice

Financial statement analysis should be included in investment analysis because

• A) A firm's business conditions can be compared with similar firms to determine whether its current operations are average or above or below average.
• B) We can predict earnings and dividends by forecasting the future financial conditions.
• C) We can use the accounting statements and information regarding current and forecasted business conditions to form expectations regarding the risk of the firm's future operations.
• D) Only a and b are valid reasons.
• E) a,b and c are all valid reasons.

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Definitions:

Keynes

John Maynard Keynes was a British economist whose theories revolutionized macroeconomic practices and governmental economic policies.

Government Spending

Expenditures made by the government for the purpose of economic activity, including salaries of public servants, public projects, and social services.

Recession

A marked reduction in economic performance widespread throughout the economy, persisting for more than a few months, often seen in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Expected Profit Rate

The forecasted return or profit expressed as a percentage that a business or investment is projected to earn over a specific period.