Step 2

KCQ Chapter 2 and Chapter 3

It’s hard to write KCQ’s because every time I start writing I end up just summarising points of the study guide because like that’s what I agree with and understand. Key concepts that stand out to me within the text included investments are successful dependant on the firm’s future earnings which, I believe, I truly impossible to determine accurately using past data which is all that is available. This is obvious very different to the finance theories that I have been taught which were presented to me as being essentially ‘fact’. This makes me believe an open mind if absolutely necessary to invest successfully. Also, as the study explains, a focus on the firm’s strategy because this paint a picture of the future, more so that share price. One of my biggest takeaway’s, is to always remember that a firm’s annual report is just another form of marketing and to always absorb the information with a grain a salt.

Honestly, I had no questions at this stage because I believe the content is pretty basic this early and its stuff that I have learnt before. As I being to read further into the study guide I am expecting to have more questions.

It is very humbling for mankind to think about how much we still don’t know, even about constructs we have created like the investing in businesses. Over my studies, I have slowly begun to understand ratios more and more by using them in many different units and I believe once you being to understand how they work and how clever they are at communicating information about the relationship of two different numbers, it is almost a light bulb moment. At the very base of my understanding of ratio’s is based of baking. 2:1 is two parts milk, to one-part eggs and such. Whenever a ratio seems too complex and I am struggling to understand the information behind it, I take it back to that basic concepts of ratio I learnt in cooking.

‘is there any reason to think that a firm’s financial statements can help us predict the future performance of a firm?’ ‘there can be as many views of value as there are people doing the analysis.’ ‘any prediction will be wrong.’ – these three comments stuck out to me in the reading. These are concepts that I want to continually remember throughout my assignment (and beyond) when I begin to get lost in my number and ratios. It is a good reminder to take a step back, and keep an open mind.

The last half of chapter 3 was quite dense mathematical content. I was a little lost with the complicated formulas but I think I understand the theory behind them. I believe they will make more sense upon a second reading of the chapter and then also when I use them in my assignment.

Published by

jessicasaccounting

Hello, my name is Jess and I'm studying a bachelor of business and a bachelor of accounting. I'm from Airlie Beach in North Queensland and moved to Brisbane in February to study at University.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s