Question

1. Your accounting teacher has been talking about how important accounting numbers are in valuing a...

1. Your accounting teacher has been talking about how important accounting numbers are in valuing a firm, and yet many of the people you know who invest are always talking about growth as the important measure. Who is right?

Homework Answers

Answer #1

Accounting teacher is correct because growth is just a parameter which can be inconclusive. For example, in the current situation, the sale of mask companies is skyrocketing because of the coronavirus panic. However, bad the company is fundamentally, their sales will grow enormously.

But a solid company is that whose numbers are strong. Therefore, focussing on accounting numbers is paramount.

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