Member Resources Main

CFA Refresher Readings

 

Financial Statement Analysis: Study Session 10

Learning Outcome Statements

 

"Financial Analysis Techniques"
The practitioner should be able to:

  • Evaluate and compare companies using ratio analysis, common-size financial statements, and charts in financial analysis
  • Describe the limitations of ratio analysis
  • Explain and demonstrate the classification of financial ratios
  • Calculate and interpret activity, liquidity, solvency, profitability, and valuation ratios
  • Demonstrate how ratios are related and how to evaluate a company using a combination of different ratios
  • Demonstrate the application of DuPont analysis (the decomposition of return on equity)
  • Calculate and interpret the ratios used in equity analysis, credit analysis, and segment analysis
  • Describe how the results of common-size and ratio analysis can be used to model and forecast earnings

 

"Financial Statement Analysis: Applications"
The practitioner should be able to:

  • Evaluate a company’s past financial performance and explain how a company’s strategy is reflected in past financial performance
  • Prepare a basic projection of a company’s future net income and cash flow
  • Describe the role of financial statement analysis in assessing the credit quality of a potential debt investment
  • Discuss the use of financial statement analysis in screening for potential equity investments
  • Determine and justify appropriate analyst adjustments to a company’s financial statements to facilitate comparison with another company

 

"International Standards Convergence"
The practitioner should be able to:

  • Identify and explain the major international accounting standards for each asset and liability category on the balance sheet and the key differences from U.S. generally accepted accounting principles (GAAP)
  • Identify and explain the major international accounting standards for major revenue and expense categories on the income statement, and the key differences from U.S. GAAP
  • Identify and explain the major differences between international and U.S. GAAP accounting standards concerning the treatment of interest and dividends on the cash flow statement
  • Interpret the effect of differences between international and U.S. GAAP accounting standards on the balance sheet, income statement, and the statement of changes in equity for some commonly used financial ratios