It Is Easier to Generate "Fictitious" Cash Flow Figures Than

question 21

True/False

It is easier to generate "fictitious" cash flow figures than to produce "fictitious" profit figures

Understand the difference and significance of market-to-book value and P/E ratios in financial analysis.

Analyze the effects of inflation on accounting depreciation and real economic income.

Recognize the importance of restating financial statements to a common accounting basis for comparison.

Calculate and interpret firm-specific ratios such as leverage, quick ratio, asset turnover, and inventory turnover.

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Definitions:

Misrepresentations

False statements or lies presented as the truth which may deceive or mislead.

Public Information

Public Information is data or knowledge that is not classified, freely available to the general public, and can be distributed legally.

Material Information

Information that could influence an investor’s decision to buy or sell securities, due to its significance.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bonds), or rights to ownership as represented by an option.