Transcription of CHAPTER 3 UNDERSTANDING FINANCIAL STATEMENTS
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11 CHAPTER 3 UNDERSTANDING FINANCIAL STATEMENTSF inancial STATEMENTS provide the fundamental information that we use to analyze andanswer valuation questions. It is important, therefore, that we understand the principlesgoverning these STATEMENTS by looking at four questions: How valuable are the assets of a firm? The assets of a firm can come in several forms assets with long lives such as land and buildings, assets with shorter lives suchinventory, and intangible assets that still produce revenues for the firm such as patentsand trademarks.
answer valuation questions. It is important, therefore, that we understand the principles ... more than one approach to valuing an asset, accounting convention takes the view that the more conservative (lower) estimate of value should be used rather than the less ... Depreciation methods can very broadly be categorized into straight line (where ...
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