Hello Rich,

Thank you for taking the time to weigh-in on the article : ) Regarding how the information provided in financial reporting is used...usually well before a valuation model is created comes financial statement analysis with its common-size work, ratio analysis, adjustments, and so forth. This is GAAP accounting, more than just pure accrual accounting. But as analysts we are certainly aware of the parts of accrual accoutning that are soft.

Thank you for including your list of some of the soft assumptions. May I add one of those soft bits that is certainly open to squishy judgments is depreciation and its partner, useful lives? There are many such judgments undertaken by business people, their accountants, and auditors to try and best reflect the tenor and direction of the company.

Last, thanks for tuning into The Enterprising Investor!

Yours, in service,

Jason