--%>
Assignment Help - homework help

Is net income of a year is doubtful for company

Is the net income of a year money the company made that given year or is this a number whose importance is quite doubtful?

E

Expert

Verified

The net income of a year is not money which accumulates in the safe. Thus, it is not “money” the company earned. Conversely, it is one of the possible numbers (along with the flexibility which accountancy gives) a company might have illustrated. Fernández (2004a and 2004b) states that, usually, cash flow is more helpful than net income: reported net income can be presented in some ways (this is just an opinion) whereas equity cash flow or free cash flow is a truth: a unique number. There is a financial maxim that, although this is not completely true, might be convenient to keep in mind: “net income is only an opinion, whereas cash flow is a fact.”

   Related Questions in Corporate Finance

  • Q : Problem on price share and stock

    Brittney and Kim Wan Sun have successfully launched a successful talent agency, ABC. They expect the firm’s earnings and dividends to grow by 20% annually for the next 10 years and they establish a strong base and to grow at a constant 5% per year thereafter. AB

    		•
  • Q : How can auditor spot acts of creative

    How can auditor spot acts of creative accounting? Means let an illustration, the excess of provisions or the non-elimination of intra group transactions along with value added.

    		•
  • Q : Define Economy Impacts Economy Impacts

    Economy Impacts: An upcoming economy is indicated by rise in stock market, as stock market is primary indicator of a economic strength of a country. Progressing economy results in market boom. Yield of companies’ increases on improving economy,

    		•
  • Q : Valuation & Merger analysis Problem

    Problem 21-1 Valuation Harrison Corporation is interested in acquiring Van Buren Corporation. Assume t

    		•
  • Q : Calculate present value of expected

    When valuing the shares of my company, I calculate the present value of the expected cash flows to shareholders moreover I add to the result obtained cash holdings and liquid investment. Is that correct?

    		•
  • Q : Expected return and standard deviation

    If an investor is considered to be risk-averse, what is his/her attitude towards expected return and standard deviation?

    		•
  • Q : Who were the creators of uncertain

    Who were the creators of uncertain volatility model?

    		•
  • Q : Which data is the most suitable for

    Which data is the most suitable for finding betas?

    		•
  • Q : What are Workpapers Workpapers : In

    Workpapers: In finance world, work papers are documents which are created during the procedure of computing the financial records of a business or individual. The accounting professional which is tasked with examining the book-keeping of a business mi

    		•
  • Q : Calculated betas when they give

    Calculated betas give different information if they are acquired by using weekly, monthly or daily data.

    		•