Unformatted text preview: idge Business Publishers, 2013 SarbanesOxley Act The SEC requires the CEO and CFO of a company to personally sign a statement attesting to the accuracy and completeness of the company’s financial statements. The statements signed by both the CEO and CFO contain the following commitments: Both the CEO and CFO have personally reviewed the annual report.
There are no untrue statements of a material fact that would make the statements misleading.
Financial statements fairly present in all material respects the financial condition of the company.
All material facts are disclosed to the company’s auditors and board of directors.
No changes to its system of internal controls are made unless properly communicated. ©Cambridge Business Publishers, 2013 Profitability Analysis ©Cambridge Business Publishers, 2013 Profit Margin, Asset Turnover, and Return on Assets for Selected Industries ©Cambridge Business Publishers, 2013 Step 3: Forecasting Financial Numbers The theoretical linkage between earnings and stock prices is as follows: current earnings predict future earnings
future earnings help determine expected future dividends
these future dividends, when discounted, determine current stock price ©Cambridge Business Publishers, 2013 Future Earnings and Excess Returns Studies find:
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- Spring '12
- Berkshire Hathaway, ©Cambridge Business Publishers