Why must financial statements be relevant? Name and discuss the 3 items that make Financial Statements “Perfectly Faithful.” Define the components of Historical Cost valuation. Define the concept of “ Fair Market Valuation.

The main elements of the relative valuation approach are: a. The valuation target, the comparison asset and the valuation measure. b. The valuation target and the relative performance measure. c. The relative valuation anchor, the valuation indicator and the valuation reference point. d. The target, the measure, the anchor, and the loss point.

Fair Value Accounting and Valuation in 3 Steps: Asset or Liability Identification: The first step involves identifying the specific assets or liabilities that will be measured at fair value. This could include financial instruments, tangible assets, intangible assets, or other items on the balance sheet. Market-Based Valuation Techniques: Fair value is determined using market-based valuation techniques. This may involve assessing current market prices, recent transactions, or employing valuation models such as discounted cash flows, comparable sales, or option pricing models. Consistent Application and Disclosure: Fair value accounting requires consistent application of valuation methods across reporting periods. Additionally, transparency and disclosure are crucial, with companies providing detailed information about the inputs, assumptions, and methods used in fair value measurements.

Critically explain each one of the following financial terms:i. Asymmetric informationii. Moral hazardiii. Adverse selectionGive examples in each case to illustrate your answer.

Briefly explain the meaning of working capital and working capital management. Also explain the relationship of current asset policy with liquidity, profit and risk. Which policy do you think is good?

Explain briefly what the terms working capital and working capital management imply. Explain the link between current asset policy and liquidity, profit, and risk as well as any other considerations. Which policy do you believe is the best?

Three common tools of financial analysis are: Multiple Choice O Financial reporting, sensitivity analysis, transactional analysis. Fair presentation, variance analysis, financial reporting. Horizontal analysis, vertical analysis, ratio analysis. Liquidation analysis, political analysis, fair value analysis. Relativity analysis, financial reporting, fair value analysis.

A. Which of the following is most closely associated with the cost of using assets? a. Asset utilization b. Sales revenue c. Proportion of debt and equity d. Average price   B. Which of the following is most closely associated with the return on management’s use of assets? a. Cost of capital b. Mix of equity types c. Prime lending rate d. # of products sold

The overriding qualitative characteristic of useful financial statements is Select answer from the options below 1.consistency. 2.accuracy. 3.verifiability. 4.relevance.

Match the term and the definition. Emphasizes decisions affecting the future. Emphasizes relevance. Emphasizes financial consequences of past activities. Not required to follow GAAP. Emphasizes objectivity.