Question

Is accounting data alone sufficient to make an investment decision? What other non-financial information might be...

Is accounting data alone sufficient to make an investment decision? What other non-financial information might be helpful for a potential investor?

Homework Answers

Answer #1

No, accounting data alone paints only a partial picture for making an investment. Moreover accounting data is susceptible to be rigged by the managers and others with vested interest. Hence we have to rely on other sources to make investments.

The other non fiancial information would be line the reputation of the firm with suppliers and customers. Its credit paying history. The demand for its products. Research and development into new products. History od innovativeness. How key people and other employers are treated in an organization etc etc.

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