FSA-Q/A3

1. Some might argue that the statement of cash flows is an optional financial statement and does not provide critical information needed for a firm or investor to succeed.  Do you agree with this statement? Why or why not?
2. There are two methods for constructing the statement of cash flows: the direct method and the indirect method.  What are the similarities and differences between the two methods?  Which of the two is most preferred?  Which is required by FASB?
3. Ratio analysis involves calculations that use the data from the financial statements to evaluate the performance of companies in different key areas.  How would this information be used by a credit analyst as compared to someone is going to make an investment decision?
4. Of what significance is the DuPont system in the analysis of a firm’s financial position?  How is the DuPont system used when evaluating a firm?
5. What recent government regulations have helped or hindered a firm’s ability to conduct its normal course of business, especially in the area of reporting requirements?