Valuation the process of converting forecasts of

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Unformatted text preview: m the underlying economics. • Accounting risk - the uncertainty in financial statement analysis due to accounting distortions. Financial analysis - the use of financial statements to analyze a companys financial position and performance and to assess future financial performance. • profitability analysis - the evaluation of a companys return on investment • Risk analysis - the evaluation of a companys ability to meet its commitments. • Prospective analysis - the forecasting of future payoffs - typically earnings, cash flows, or both. • Valuation - the process of converting forecasts of future payoffs into an estimate of company value. Planning activities • Business plan - describes the company's purpose, strategy, and tactics for its activities. o Assists managers in focusing their efforts and identifying expected opportunities and obstacles. Financing Activities - refers to methods that companies use to raise the mone...
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