day4 - Click to edit Master subtitle style Relevant Metrics...

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Unformatted text preview: Click to edit Master subtitle style Relevant Metrics Dr. James Gong Todays Agenda n What accounting information to report? n Theoretical model n SFAC 5 and SFAC6 n Group exercise: What do financial analysts want? n Whats strategy and why strategy in accounting? n Strategy based business reporting model n PwC Value-reporting n UIUC strategy based auditing Review of Last Session n How do we measure phenomena and attributes in accounting? What Information to Report n Theoretical model n Finance theory based n Accounting based Gordon s Dividend Discount Model P D t = t = 1 (1+k )t where P0 = Current value of stock Dt = Dividend at time t k = Required return P D1+ P1 = (1+ k) If holding in one period P D 1 = (1+ k) If holding in two periods D2+ P2 (1+k )2 + If holding for infinite periods Price-Earnings Relationship P D 1 (1+ k) = D k = D 1 (1+k )2 + + (Assume no growth, i.e., D0 = D1 =and using the geometric progression formula) = k E Assume earnings = dividends, and assume earnings and dividends to remain constant forever....
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This note was uploaded on 08/30/2009 for the course ACCY 301 taught by Professor Keller during the Spring '08 term at University of Illinois at Urbana–Champaign.

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day4 - Click to edit Master subtitle style Relevant Metrics...

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