BMAN71132
FINANCIAL STATEMENT ANALYSIS
21st May 2021
Answer only TWO questions
All questions are worth EQUAL marks
1. Discuss what you know about the different approaches of stock selection through price multiples. In particular, (i) what are their strengths and weaknesses, and (ii) how can they can be improved? (50 marks)
2. Discuss what you know about the residual income valuation model and the abnormal earnings growth model. In particular, (i) what are their strengths and weaknesses, and (ii) what do empirical studies tell us about their performance? (50 marks)
3. Discuss the rationale and evidence associated with empirical studies that examine whether the capital market is informationally efficient with respect to financial statement information. (50 marks)
4. Financial statement information can be employed to (i) detect earnings management and (ii) measure earnings quality. Discuss the rationale and evidence associated with accounting researches that examine these issues. (50 marks)
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