The Capital Asset Pricing Model states that the price of a stock today is the discounted future cash flows from that stock discounted at the appropriate market rate given all publicly available information.

Financial statements of the company is an important source of the publicly available set of information.

Required:

Discuss how financial statements provide useful information about the future cash flows of the firm and the risks associated with that cash flow.

Critique the completeness and reliability of the firm's reported financial statements