A describe the objective of financial statements and the importance of financial reporting standards in security analysis and valuation;

Question 1

IASB Conceptual Framework Objective of Financial Statements

Answer 1

To provide info about the firm to current and potential investors and creditors(banks) that is useful for making their decisions about investing in or lending to the firm.

Question 2

Importance of financial reporting standards

Answer 2

Consistency (narrow the range of acceptable responses)

Ensure that transactions are reported by firms similarly

Not designed solely for valuation purposes though inputs are provided for valuation purposes.

Question 3

Financial decisions and A=L+SE

Answer 3

We provide info to L+SE as to whether they provide resources to the firm via A