basic financial tools essential for firm valuation
balance sheet income statement financial ratios Cash flows
How Do We Get Financial Information?
company itself (Annual report, SEC fillings, additional information) data from government agencies (information about industries and the economy) financial service firms (Bloomberg, Standart & Poors)
Accounting Liquidity
quickness with which assets can be converted to cash. Liquid assets have lower rates of return. Current assets are the most liquid. The more liquid a firm’s assets, the less likely the firm is to experience problems meeting short-term obligations.
Name 3 aspects that suggest that valuation is very relevant
Information paradoxon No market values Bubbles and crisis
