Unit: Investment Analysis
400-600 words
Jessica Madison has been working as an accounting intern for ABC for the past 3 years. Jessica has recently completed her BA degree and aspires to become a financial analyst at ABC. You have agreed to set aside a time each week to help Jessica become more familiar with various investment management fundamentals.
Explain the following to Jessica:
- How does ratio analysis serve as an effective tool to assess the current and future financial status of firms? Describe the limitations of ratio analysis.
- Explain the odd-lot theory and how it acts as a market predictor.
- How does a fundamental type of analysis, such as ratio analysis, differ from a technical analysis?
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Analysis
The given scenario relates to Madison who has been working as an intern at ABC for the last 3 years. She recently completed her BA degree. She also desires to be a financial analyst in the future at the same company. In this paper, I have agreed to assist Jessica become more familiar with the various investment management fundamentals that could be applicable in her future career. The first thing to consider during the exercise is the importance of financial rations and their ability to assess the status of a company within the industry. Financial ratios in accounting refer to various numerical values that are calculated from the financial statements of an organization to determine the financial well-being of an organization.
(645 words)