Does Stock Price Really Reflct the Financial Statement

| Does the tired worth really reflect the financial military capability of a company? | | Negar Tabatabaei [ZP00883] 12/2/2010 | Introduction Financial distinctiveness of a company determines the value of the mansion. The primary objective of the mountain is to value maximization. When we discuss management objectives, we argon talking most maximizing stockholders wealth. Therefore, what we really mean is to increase the fundamental price of the firms common stock and not only the current market price. The corporations most most-valuable objectives bequeath form the financial strength of a company. adept way to bring on the value of a firm is the companys ability to generate cash flows straightaway and in the future. The attempts to maximize fundamental stock price will be the same actions as to benefit society. Hence, if the managers of companies focus and grapple only about maximizing stock price, they will extend dismally, because the prices may go up, but it is only temporarily. These will dissemble the value of the firms. Stock Prices Maximizing the fundamental stock price is the most important objective for most corporations. 1.

Three main Influences on Stock Prices * Fundamentals Obviously, a careen in the economic fundamentals of the business is the most charge sour on a stocks price. If revenues and profits are on an upward trend with no indications of being send off level, we can expect to see the stock price forward motion as investors bid up this attractive company. On the different hand, if the profit picture is flat or worse, declining with no change in sight, it is expected for investors to abandon the stock and the price to fall. The degree is that changes in the underlying business sport a direct impact on the stocks price. Smart investors stain the delicate changes before they become price-movers and take the appropriate action. * sphere Changes Changes in the stocks sector can have positive or negative effects on price. some sectors or industries... If you want to get a full essay, ordain it on our website: Orderessay

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