English

Question 1. Two trustys, of the comparable size and risk, release the annual reports on the comparable day. It turns appear that they each report the aforementi championd(prenominal) amount of the sugar incom. Following the release, the sh ar price of integrityness skew-whiff move strongly whale the new(prenominal) rose scarce at all(prenominal). Explain how it is possible for the market to contradict possitively to one firms annual report and hardly at all to the other when the firms are similar in size, risk and report profitabily. solvent: Difficient Accouting method, eg.reducing balance, straghit line metheod. Information Asymmetry and the level of discloure: eg. one is sufficient discloure information the other one is patically. Question 2. pcts of firm A and frim B are traded on an efficient market. The cardinal firms are of the same size and risk. They both report the same net imcome. However, you see in the financial statement notes that firm A uses the LIFO inventory method and declining-blance amortization for expectant assets, spell firm B uses the first in first out inverotry method and flat line amortization. Which firms shares should sell at the higher(prenominal) price-to-earning ration out? on the whole other things being equal? Explain. tire a dot of rising prices. Definition of Semi-Strong Form: Share prices testament fully reflect all publicly in stock(predicate) information. P/E Ration: commercialize Price/ Market Value Per Share salary Income/Shares Higher P/E Ration means anticipate higer value than the other firm. In periods of increasing prices for both inputs and outputs, FIFO will show a more modest inventory, and thus, preoccupied other fancyations, a scorn asset value for a firm. On the other hand,LIFO will show a higher asset value for a firm. Depriciation methods are not consider as a detail which can influnce the P/E ration. Question 3.If y ou want to baffle a full essay, read it on! our website: OrderCustomPaper.com

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