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Which organization owns the trademark for Chartered Financial Analyst®?
Which organization owns the trademark for Chartered Financial Analyst®?
What is the focus of Reading 15 in the SchweserNotes for the 2022 Level I CFA exam?
What is the focus of Reading 15 in the SchweserNotes for the 2022 Level I CFA exam?
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Which of the following is a potential violation of global copyright laws and the CFA Institute Code of Ethics?
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Which reading covers the topic of understanding cash flow statements?
Which reading covers the topic of understanding cash flow statements?
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What is the purpose of footnotes and supplementary information in understanding a company's balance sheet?
What is the purpose of footnotes and supplementary information in understanding a company's balance sheet?
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What is the difference between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) regarding the presentation of balance sheet information?
What is the difference between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) regarding the presentation of balance sheet information?
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What is the focus of Exam Module 15.2?
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Which type of assets are included in Module 18.5?
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What is the impact of off-balance sheet financing on a company's financial position?
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What is the purpose of Module Quizzes in the SchweserNotes?
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What is the difference between tangible assets and intangible assets?
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Which reading covers the topic of noncurrent (long-term) liabilities?
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What is the difference between temporary and permanent differences between taxable income and accounting income?
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Which method is used to calculate deferred taxes under International Financial Reporting Standards (IFRS)?
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What is the role of auditors in ensuring financial reporting quality?
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What is the concept of earnings management?
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Which financial statement is used to evaluate a company's liquidity?
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What is the impact of off-balance sheet financing on a company's financial position?
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Which reading covers the topic of earnings management?
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Study Notes
or M odule Q uiz zes
BOOK 2: FINANCIAL STATEMENT ANALYSIS
SCHWESER NOTES™ 2022 LEVEL I CFA®
© 2021 Kaplan, Inc. All rights reserved.
Published in 2021 by Kaplan, Inc.
Printed in the United States of America.
ISBN: 978-1-0788-1600-7
These materials may not be copied without written permission from the author. The unauthorized duplication of these notes is a violation of global copyright laws and the CFA Institute Code of Ethics. Your assistance in pursuing potential violators of this law is greatly appreciated.
Required CFA Institute disclaimer: “CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by Kaplan Schweser. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.”
Certain materials contained within this text are the copyrighted property of CFA Institute. The following is the copyright disclosure for these materials: “Copyright, 2021, CFA Institute. Reproduced and republished from 2022 Learning Outcome Statements, Level I, II, and III questions from CFA® Program Materials, CFA Institute Standards of Professional Conduct, and CFA Institute’s Global Investment Performance Standards with permission from CFA Institute. All Rights Reserved.”
Disclaimer: The SchweserNotes should be used in conjunction with the original readings as set forth by CFA Institute in their 2022 Level I CFA Study Guide. The information contained in these Notes covers topics contained in the readings referenced by CFA Institute and is believed to be accurate. However, their accuracy cannot be guaranteed nor is any warranty conveyed as to your ultimate exam success. The authors of the referenced readings have not endorsed or sponsored these Notes.
CONTENTS
Learning Outcome Statements (LOS)
STUDY SESSION 5 — Financial Statement Analysis (1)
READING 15 Introduction to Financial Statement Analysis Exam Focus Module 15.1: Financial Statement Roles Module 15.2: Footnotes, Audit, and Analysis Key Concepts Answer Key for Module Quizzes
READING 16 Financial Reporting Standards Exam Focus Module 16.1: Standards Overview Module 16.2: Financial Reporting Framework Key Concepts Answer Key for Module Quizzes
STUDY SESSION 6 — Financial Statement Analysis (2)
READING 17 Understanding Income Statements Exam Focus Module 17.1: Income Statement Overview Module 17.2: Revenue Recognition Module 17.3: Expense Recognition Module 17.4: EPS and Dilutive Securities Module 17.5: Common-Size Income Statements Key Concepts Answer Key for Module Quizzes
READING 18 Understanding Balance Sheets Exam Focus Module 18.1: Balance Sheet Introduction Module 18.2: Assets and Liabilities Module 18.3: Current Assets and Liabilities Module 18.4: Noncurrent Assets and Liabilities Module 18.5: Intangible Assets Module 18.6: Marketable Securities Module 18.7: Shareholders’ Equity and Ratios Key Concepts Answer Key for Module Quizzes
READING 19 Understanding Cash Flow Statements Exam Focus Module 19.1: Cash Flow Introduction Module 19.2: The Direct and Indirect Methods heet in evaluating a company's financial position. c. describe the different categories of assets and liabilities on a balance sheet, including current and non-current (long-term) assets and liabilities. d. calculate and interpret liquidity ratios, such as current ratio and quick ratio, using information from a balance sheet. e. calculate and interpret solvency ratios, such as debt-to-equity ratio and interest coverage ratio, using information from a balance sheet. f. describe the concept of off-balance sheet financing and its potential impact on a company's financial position. g. explain the differences between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) regarding the presentation of balance sheet information. h. describe the importance of footnotes and supplementary information in understanding a company's balance sheet. i. evaluate a company's financial position using a combination of balance sheet analysis and other financial statement analysis techniques.of long-lived assets: tangible assets, intangible assets, natural resources, and financial assets. c. describe the different methods of depreciation for tangible assets and their impact on financial statements and ratios. d. explain the concept of impairment and its impact on the valuation of long-lived assets. e. describe the different methods of amortization for intangible assets and their impact on financial statements and ratios. f. explain the concept of depletion and its impact on the valuation of natural resources. g. calculate and interpret ratios related to long-lived assets, including return on assets, asset turnover, and fixed asset turnover. h. analyze and interpret the financial statements of companies with different types of long-lived assets and different methods of depreciation or amortization. The topical coverage corresponds with the following CFA Institute assigned reading: 23. Income Taxes The candidate should be able to: a. describe the difference between taxable income and accounting income and the reasons for such differences. b. explain the concept of deferred taxes and the reasons for their existence. c. describe the different methods of calculating deferred taxes under International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP). d. calculate and interpret the impact of changes in tax rates on deferred tax assets and liabilities. e. describe the different types of temporary and permanent differences between taxable income and accounting income and their impact on deferred taxes. f. calculate and interpret the effective tax rate and the marginal tax rate. g. describe the financial statement presentation and disclosure requirements related to income taxes. h. analyze and interpret the financial statements of companies with different tax situations and identify potential tax-related risks and opportunities. The topical coverage corresponds with the following CFA Institute assigned reading: 24. Noncurrent (Long-Term) Liabilities The candidate should be able to: a. describe the different types of noncurrent liabilities, including bonds, leases, pensions, and other postemployment benefits. b. explain the concept of bond indenture and the different terms and features of bonds, including maturity, face value, coupon rate, and yield to maturity. c. calculate and interpret the price, yield, and accrued interest of bonds using different methods. d. explain the concept of leases and their impact on financial statements and ratios. e. describe the different types of pension and other postemployment benefit plans and their impact on financial statements and ratios. f. calculate and interpret ratios related to noncurrent liabilities, including debt-to-equity ratio, interest coverage ratio, and debt service coverage ratio. g. analyze and interpret the financial statements of companies with different types of noncurrent liabilities and identify potential risks and opportunities related to these liabilities.evaluate the impact of financial reporting quality on a company's reputation, investor confidence, and access to capital markets.
c) identify and explain the factors that affect financial reporting quality, such as management integrity and competence, internal controls, auditor independence, and regulatory oversight.
d) describe the role of auditors in ensuring financial reporting quality and the different types of audit opinions.
e) analyze financial statements for potential red flags or indicators of low financial reporting quality, such as inconsistencies, unusual transactions, or aggressive accounting practices.
f) discuss the importance of transparent and accurate disclosures in financial reporting and the potential consequences of inadequate or misleading disclosures.
g) explain the concept of earnings management and the different methods that companies may use to manipulate financial results.
h) evaluate the ethical implications of financial reporting decisions and the responsibility of companies to uphold ethical standards in their financial reporting.
i) discuss the impact of international financial reporting standards (IFRS) on financial reporting quality and the challenges and opportunities of global standardization.
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Test your knowledge on financial statement analysis with these module quizzes based on the SchweserNotes™ for the 2022 Level I CFA® exam. These quizzes cover topics such as financial statement roles, standards overview, income statements, balance sheets, cash flow statements, long-lived assets, income taxes, noncurrent liabilities, and financial reporting quality. With answer keys provided, you can assess your understanding of the key concepts and prepare for the CFA® exam with confidence.
