financial dq 12

Please answer two questions below with a minimum of 300 words per answer. No plagiarizing, apa format due 11/22/17

This chapter is about expanded analysis, which goes beyond the financial statements and their ratios. In fact, when we analyze financial statements, we must go beyond the surface and use various kinds of information to slice the company in order to better understand the financial reporting quality and interpret ratios. Here below are some of major interesting topics.

What are the top five most used ratios? Explain from your knowledge of financial reporting why these ratios are widely used.

What is conservatism? Why some experts use conservatism as the indicator of quality of earnings? Give a couple of examples to illustrate your points.

It is always difficult to forecast financial failure. What are the major univariate model and multivariate model? Interpret the variables used in these models. Note: You will need to know how to calculate Altman model and interpret the results.

LIFO reserves are used by companies that use LIFO inventory method. Explain why LIFO reserves can affect earning quality.

Management of earnings is a major issue all users get concerned. What is the fundamental issue related to this problem? Illustrate your points with examples.

Valuation is an extended usage of fundamental financial information. What are the major approaches used in valuation?

Why are both earnings and cash flow used in valuation? Explain the advantages and disadvantages for each.