The process of financial reporting, financial statement analysis, and valuation helps investors and
analysts understand a firm’s profitability, risk, and growth; use that information to forecast future
profitability, risk, and growth; and ultimately to value the firm, enabling intelligent investment
decisions. This process is central to the role of accounting, financial reporting, capital markets,
investments, portfolio management, and corporate management in the world economy. When
conducted with care and integrity, financial statement analysis and valuation are fascinating and
rewarding activities that can create tremendous value for society. However, as past financial crises in our capital markets reveal, when financial statement analysis and valuation are conducted
carelessly or without integrity, they can create enormous loss of value in the capital markets and
trigger deep recession in even the most powerful economies in the world. The stakes are high.