How do you response to the fpollowing discussion post from a classmate. Please p
ID: 2812579 • Letter: H
Question
How do you response to the fpollowing discussion post from a classmate. Please provide answer and reference. Thank you in advance!
What kinds of financial information exist in various places?
Financial information including earnings releases, income, expenses (short and long term) and earnings can be found on financial websites geared to investors such as Yahoo Finance. Additional information that can be found include amount of shares traded, stock price and other stock information. Another source of information regarding the finances of a company can be found on the company website, usually in an investor relations page. This information can be used to calculate ratios needed to broaden a potential investor’s scope into the financial wellbeing of the company.
What is the difference between information found on the Internet and other sources of information?
Information found on the Internet may not always be accurate being there are security risks inherent to Internet usage specifically if the website is not secure. An additional problem with Internet based financial information is that the information may not always tell some of the intricacies of the business information, such as the why to a ratio. Did the company recently pay off a debt forcing the company to seem to have fewer resources although it also has debt? Questions such as these require additional sources of information that may not be found online, especially with a smaller company. Using financial information filed with the SEC, IRS if publicly available and sourcing information directly from a company may be options that are accurate.
What source of information that you found in your research do you find most helpful?
The most important information in my personal research of companies is dividend reports. This information gives me an idea of the company health because a history of giving dividends and increases over time show that the company is making and exceeding expectations and paying back investors. Additional information that is helpful is calculating their current ratio. I believe this information is important because it allows me to have a quick snapshot of the current health of a company in the short term. Looking at the current assets against current liabilities allows me the opportunity to have an idea of whether the company is worth digging deeper into before I look at long-term debt and potential issues.
How does a website like Yahoo finance help you perform ratio analysis?
Yahoo Finance lists income, expenses, analysis, and other information that assist potential investors in determining if the company is in their best interest. This website gives an unbiased view of the finances of a company. The analysis is given by professional investors and is clearly stated as such along with any disclaimers, which are required by law for investors in order to avoid insider trading.
References:
Ross, S. A., Westerfield, R., & Jordan, B. D. (2013). Fundamentals of corporate finance. New York: McGraw-Hill/Irwin.
Yahoo Finance. (n.d.). Retrieved, September 4 2018, from https://finance.yahoo.com/
Explanation / Answer
What kinds of financial information exist in various places?
There are various kinds of financial information available about public & private companies on various sources like Company’s website, financial websites, research companies, annual reports etc. These financial information can be:
1. Income Statement – It is a statement which displays revenues, expenses and profit & loss for a particular financial year.
2. Balance Sheet – It is a statement which shows assets, liabilities and shareholder’s value on a reporting date.
3. Statement of change in equity- This statement displays the movement and balance of equity for the period.
4. Cash flow Statement – Statement which shows cash inflow, cash outflow and net cash& cash equivalents of a company for a particular period.
5. Notes to financial statements: Important notes/items presented in financial statements which assist in financial decision of a company.
6. Stock price, stock movement charts, stock details etc.
7. Company’s upcoming corporate actions such as mergers & acquisitions, dividend announcement, IPO etc.
All these financial information is useful for many stakeholders such as shareholders, lenders, investors, regulators, employees and others to take important business decisions.
What is the difference between information found on the Internet and other sources of information?
There are many sources available to fetch financial information of a company such as Company’s website, financial websites, research companies, annual reports, regulatory, etc. People make use of internet as a tool in personal finance decision-making with a focus on investment decisions.
By using internet, up to date financial information of companies can be fetched faster and in easier way. However, the available information on internet may not always be authentic as:
Whereas, financial information available with SEC, IRS is accurate as regulatory put efforts to root out financial fraud and ensure that investors receive accurate, transparent, and complete financial information.
What source of information that you found in your research do you find most helpful?
Before investing in a particular company, an investor should have a look on economy, industry and companies financial data. Various financial statements and ratio analysis tell the investors about company’s financial health, growth of the company, prediction on stock price movement, dividend policies etc.
As investors invest in a company for a return on their investment that is dividend, so dividend reports are more useful for investors. As dividend reports tell the investors about company’s dividend policy, history of paying dividend, and hike in dividend payout ratio so based on these investors can estimate future dividend payment and make investing decisions accordingly. Other ratios such as Current ratio which indicates liquidity and short term performance of the company might be useful for investors to decide whether to perform deep analysis on a particular company or not. However, an investor should go through all important financial data such as debt to equity ratio, PS, DPS etc. before taking any investment decisions.
How does a website like Yahoo finance help you perform ratio analysis?
Websites like Yahoo finance provides financial news, stock quotes, financial reports and press releases to users.
It provides enough financial data to select analyze and make investment decisions.
It provides financial statements which includes revenue, expenses, profit & loss, liabilities, assets, equity, retained earnings, cash flow, stock quotes and upcoming corporate actions information of companies which assist investors to perform ratio analysis on their own and make investment decision accordingly. Also, it provides useful information and analysis performed by professionals and advisors with disclaimers which assist non-professionals to take investing decision in effective way.
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