Asked by loveneet singh on May 26, 2024
Verified
When valuing a firm's stocks and bonds, finance professionals place equal significance on accounting results and cash flows.
Stocks and Bonds
Financial instruments that represent ownership in a company (stocks) and debt obligations (bonds), respectively, offering different levels of risk and potential returns.
Cash Flows
The aggregate sum of funds flowing in and out of a company, significantly influencing its ability to meet short-term obligations.
- Acquire knowledge about the role of cash flows and accounting results in guiding financial choices.
Verified Answer
CG
Carmen GonzalezMay 28, 2024
Final Answer :
False
Explanation :
Finance professionals generally place more importance on cash flows than accounting results when valuing a firm's stocks and bonds, as cash flows are a more reliable indicator of a company's financial health and ability to generate returns for investors. Accounting results can be manipulated through various accounting practices, which can make them less reliable.
Learning Objectives
- Acquire knowledge about the role of cash flows and accounting results in guiding financial choices.
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