ASS#1 Step 1

ACCT13017 – Assessment 1 – Step 1 

My blog link: https://quynhgiaonguyen.wixsite.com/my-site-1 

KCQ 1 - Preface

"Relying too heavily on other people's opinions can damage our sense of reality

I don't really think it's wrong to seek opinions from others."

Everyone has a different perspective, so whether that perspective is right or wrong is difficult to analyze because it depends on each perspective and time of life. This means that the fact that we perceive information about that event as correct does not mean that it is true for other people as well as at other times. And because each person will have a different perspective and perspective, in order to build a company and maintain business operations effectively, I think we still need to listen and receive opinions from others such as partners and employees to see objectively and make the right decisions and appropriate strategies. I agree with the author that depending entirely on other people's opinions can affect our own feelings, but we cannot completely give up not listening or not receiving opinions from others. Instead, I think we should still receive opinions from others but in a selective way. Understand the situation through different perspectives from which to analyze and make the right decisions, suitable for the business. In addition, the company is operated and maintained based on the efforts of many individuals. Therefore, we cannot ignore the opinions of our employees because of our own pride and selfishness.

KCQ 2 - Chapter 1

"If a firm has been strongly growing its earnings in recent years, we can often mistakenly think this firm's earnings will continue to grow strongly for many years into the future, and vice versa for firms with poor earnings growth in the past".

Based on this example from the author, it really helped me explain more clearly about investing and the practical information I need to know in fundamental analysis that no one had ever told me before. Most of us only see the immediate benefits and forget about the past and future that can affect and happen during the investment process. Through the specific and useful information from the author, I have a better understanding of the basic analytical model that each of us can apply. Specifically, Financial statement analysis helps me and everyone else see and make decisions that are correct and appropriate strategies in the business process as well as help us expand our own judgments in the business investment process.

"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent".

I still don't really understand the meaning of this sentences in the chapter.

Hopefully the author can explain a little more clearly or add a few examples so that I can clearly grasp and understand what the author wants to express. I have a better grasp of the company's operational aspects and through analyzing financial statements to understand the company's financial situation. After reading this chapter, I feel that analyzing financial statements is more complicated than I thought. It requires judgment and interpretation, not just numbers as I thought before. I find quite interesting the idea of ​​using frameworks like discounted cash flow (DCF) and economic profit to analyze and create value accurately. However, the author also added that caution is needed because conflicts and misunderstandings can easily occur in the data. This made me realize that financial analysis is not about finding an exact answer but about making informed judgments. Overall, this chapter helped me have a clearer view of accounting and finance as well as a correct understanding of financial statement analysis methods in real business.

Questions:

1. Why do financial statements not include direct capital expenditures?


2. How do analysts accurately estimate the cost of capital?


3. Is relying on assumptions and guesswork to set prices effective?