Financial Statement analysis.pdf

Book 2: Financial Statement Analysis Sch w ese rN ote s™ 2 0 22 Leve l I C FA ® SC H W ESE R N OTES™ 2 022 L E V EL I C FA ® B O OK 2 : F IN AN CIA L S T A T EM EN T A N ALY SIS © 2021 K ap lan , I n c. A ll r ig h ts r e se rv e d . P ubli s h ed i n 2 021 b y K ap lan , I n c. P rin...

Book 2: Financial Statement Analysis Sch w ese rN ote s™ 2 0 22 Leve l I C FA ® SC H W ESE R N OTES™ 2 022 L E V EL I C FA ® B O OK 2 : F IN AN CIA L S T A T EM EN T A N ALY SIS © 2021 K ap lan , I n c. A ll r ig h ts r e se rv e d . P ubli s h ed i n 2 021 b y K ap lan , I n c. P rin te d i n t h e U nit e d S tat es o f A m eric a. IS B N : 9 78-1 -0 788-1 600-7 T hese m ate ria ls m ay not be co p ie d w it h ou t w rit te n perm is sio n fr o m th e au th or. The u n au th oriz e d d upli c a tio n o f th ese n ote s is a v io la tio n o f g lo b al c o p yrig h t la w s a n d th e C FA In stit u te C o d e o f E th ic s. Yo u r a ssis ta n ce in p ursu in g p ote n tia l v io la to rs o f th is la w is g re a tly a p pre cia te d . R eq u ir e d C FA In stit u te d is c la im er: “ C FA In stit u te d oes n ot e n dorse , pro m ote , or w arra n t th e acc u ra cy o r q u ali t y o f t h e p ro d ucts o r s e rv ic e s o ffe re d b y K ap la n S ch w ese r. C FA ® a n d C h arte re d F in an cia l A naly st® a re t r a d em ark s o w ned b y C FA I n stit u te .” C erta in m ate ria ls c o n ta in ed w it h in t h is t e x t a re t h e c o p yrig h te d p ro p erty o f C FA I n stit u te . T he fo llo w in g is th e co p yrig h t d is c lo su re fo r th ese m ate ria ls : “C o p yrig h t, 2021, CFA In stit u te . R ep ro d uce d a n d re p ubli s h ed fr o m 2 02 2 L ea rn in g O utc o m e S ta te m en ts , Leve l I, II, an d III q u estio n s f r o m C FA ® P ro gra m M ate ria ls , C FA I n stit u te S ta n dard s o f P ro fe ssio n al C o n duct, an d CFA I n stit u te ’s G lo b al I n ve stm en t P erfo rm an ce S ta n dard s w it h p erm is sio n fr o m C FA I n stit u te . A ll R ig h ts R ese rv e d .” D is c la im er: T he S ch w ese rN ote s s h ou ld b e u se d i n c o n ju n ctio n w it h t h e o rig in al r e a d in gs a s s e t fo rth b y C FA I n stit u te i n t h eir 2 022 L eve l I C FA S tu dy G uid e. T he i n fo rm atio n c o n ta in ed i n t h ese N ote s c o ve rs t o p ic s c o n ta in ed i n t h e r e a d in gs r e fe re n ce d b y C FA I n stit u te a n d i s b eli e ve d t o b e acc u ra te . H ow eve r, th eir a cc u ra cy c a n not b e g u ara n te ed n or i s a n y w arra n ty c o n ve ye d a s t o y o u r u lt im ate e x a m s u cce ss. T he a u th ors o f t h e r e fe re n ce d r e a d in gs h ave n ot e n dorse d o r s p on so re d th ese N ote s. CONTENTS Learn in g O utc o m e S ta te m en ts ( L O S) S T UD Y S E SSIO N 5 — Fin an cia l S ta te m en t A naly sis ( 1 ) R EA D IN G 1 5 In tr o ductio n t o F in an cia l S ta te m en t A naly sis E xa m F o cu s M odule 1 5.1 : F in an cia l S ta te m en t R ole s M odule 1 5.2 : F o otn ote s, A udit , a n d A naly sis K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 1 6 Fin an cia l R ep ortin g S ta n dard s E xa m F o cu s M odule 1 6.1 : S ta n dard s O verv ie w M odule 1 6.2 : F in an cia l R ep ortin g F ra m ew ork K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes S T UD Y S E SSIO N 6 — Fin an cia l S ta te m en t A naly sis ( 2 ) R EA D IN G 1 7 U ndersta n din g I n co m e S ta te m en ts E xa m F o cu s M odule 1 7.1 : I n co m e S ta te m en t O verv ie w M odule 1 7.2 : R ev en ue R eco gn it io n M odule 1 7.3 : E xp en se R eco gn it io n M odule 1 7.4 : E PS a n d D ilu tiv e S ecu rit ie s M odule 1 7.5 : C om mon-S iz e I n co m e S ta te m en ts K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 1 8 U ndersta n din g B ala n ce S h eets E xa m F o cu s M odule 1 8.1 : B ala n ce S h eet I n tr o ductio n M odule 1 8.2 : A sse ts a n d L ia b ilit ie s M odule 1 8.3 : C urre n t A sse ts a n d L ia b ilit ie s M odule 1 8.4 : N oncu rre n t A sse ts a n d L ia b ilit ie s M odule 1 8.5 : I n ta n gib le A sse ts M odule 1 8.6 : M ark eta b le S ecu rit ie s M odule 1 8.7 : S h are h old ers’ E quit y a n d R atio s Key C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 1 9 U ndersta n din g C ash F lo w S ta te m en ts E xa m F o cu s M odule 1 9.1 : C ash F lo w I n tr o ductio n M odule 1 9.2 : T he D ir e ct a n d I n dir e ct M eth ods M odule 1 9.3 : C onvertin g I n dir e ct t o D ir e ct M odule 1 9.4 : F re e C ash F lo w a n d R atio s K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 2 0 Fin an cia l A naly sis T ech niq ues E xa m F o cu s M odule 2 0.1 : I n tr o ductio n t o F in an cia l R atio s M odule 2 0.2 : F in an cia l R atio s, P art 1 M odule 2 0.3 : F in an cia l R atio s, P art 2 M odule 2 0.4 : D uP ont A naly sis M odule 2 0.5 : M ore F in an cia l R atio s K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes S T UD Y S E SSIO N 7 — Fin an cia l S ta te m en t A naly sis ( 3 ) R EA D IN G 2 1 In ven to rie s E xa m F o cu s M odule 2 1.1 : C ost F lo w M eth ods M odule 2 1.2 : I n ven to ry S y ste m s Module 2 1.3 : C onvertin g L IF O t o F IF O M odule 2 1.4 : I n ven to ry V alu atio n M odule 2 1.5 : I n ven to ry A naly sis K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 2 2 Long-L iv ed A sse ts E xa m F o cu s M odule 2 2.1 : C ap it a liz atio n v s. E xp en sin g M odule 2 2.2 : D ep re cia tio n M odule 2 2.3 : I m pair m en t a n d R ev alu atio n M odule 2 2.4 : F ix e d A sse t D is c lo su re s K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 2 3 In co m e T axe s E xa m F o cu s M odule 2 3.1 : T ax T erm s Module 2 3.2 : D efe rre d T ax L ia b ilit ie s a n d A sse ts M odule 2 3.3 : D efe rre d T ax E xa m ple s M odule 2 3.4 : C han ge i n T ax R ate s M odule 2 3.5 : P erm an en t D iffe re n ces K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 2 4 N on-C urre n t ( L ong-T erm ) L ia b ilit ie s E xa m F o cu s M odule 2 4.1 : B ond I s su an ce M odule 2 4.2 : D is c o unt a n d P re m iu m B onds M odule 2 4.3 : I s su an ce C ost, D ere co gn it io n, a n d D is c lo su re s M odule 2 4.4 : L ease a n d P en sio n A cco untin g K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes S T UD Y S E SSIO N 8 — Fin an cia l S ta te m en t A naly sis ( 4 ) R EA D IN G 2 5 Fin an cia l R ep ortin g Q ualit y E xa m F o cu s M odule 2 5.1 : R ep ortin g Q ualit y M odule 2 5.2 : A cco untin g C hoic es a n d E stim ate s M odule 2 5.3 : W arn in g S ig n s K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes R EA D IN G 2 6 A pplic atio ns o f F in an cia l S ta te m en t A naly sis E xa m F o cu s M odule 2 6.1 : F o re castin g M odule 2 6.2 : C re d it a n d E quit y A naly sis K ey C oncep ts A nsw er K ey f o r M odule Q uiz zes T o pic Q uiz : F in an cia l S ta te m en t A naly sis F o rm ula s In dex LE ARN IN G O U TC O M E S TA TE M EN TS ( L O S) ST U DY S E SSIO N 5 The t opical cover ag e c orr esponds with the follo wing CFA Institut e assigned r eading: 15. I n tr o d u ctio n t o F in an cia l S ta te m en t A naly sis T he c an did ate s h ould b e a b le t o : a. d esc rib e t h e r o le s o f