400-500 Words

1. What is the rational explanation of the phenomenon of an investment increasing in value while generating losses? (b) Explain the fine line that financial analysts must walk.

2. a) Why would it seem paranoid for a novice analyst to consider every companys income statement with suspicion? (b) What are telltale danger signals, and then, explain the analogy that corporate budget systems are designed to reward lies and punish truth.

3. a) Explain the essential idea of leveraged buyout? (b) Explain how the riddle of a franchisers profits and franchisees losses can be resolved?

4. a) As an analyst, explain why a careful reading of the Notes to Financial Statements will disclose if a company is exaggerating revenues. (b) Explain how a low P/E multiple company can accelerate its earnings growth and thus become perceived as a high-growth stock.

5. a) How does the use of common form income statements for a peer group allow the analyst to uncover capitalization abuses? (b) What is restructuring, and what is the dangerous trap that users of financial statements must avoid?