2022 CFA Program Curriculum Level I Financial Statement Analysis AND Corporate Issuers

Description

Prepare for success on the 2022 CFA Level I exam with the latest official CFA® Program Curriculum. The 2022 CFA Program Curriculum Level I Box Set contains all the material you need to succeed on the Level I CFA exam in 2022. This set includes the full official curriculum for Level I and is part of the larger CFA Candidate Body of Knowledge (CBOK). Highly visual and intuitively organized, this box set allows you to: Learn from financial thought leaders. Access market-relevant instruction. Gain critical knowledge and skills. The set also includes practice questions to assist with your recall of key terms, concepts, and formulas. Perfect for anyone preparing for the 2022 Level I CFA exam, the 2022 CFA Program Curriculum Level I Box Set is a must-have resource for those seeking the foundational skills required to become a Chartered Financial Analyst®. How to Use the CFA Program Curriculum Background on the CBOK Organization of the Curriculum Features of the Curriculum Designing Your Personal Study Program CFA Institute Learning Ecosystem (LES) Prep Providers Feedback Financial Statement Analysis 6 Financial Statement Analysis (2) 17 Understanding Income Statements Introduction Components and Format of the Income Statement Revenue Recognition 3.1 General Principles 3.2 Accounting Standards for Revenue Recognition Expense Recognition: General Principles 4.1 General Principles Issues in Expense Recognition: Doubtful Accounts, Warranties 5.1 Doubtful Accounts 5.2 Warranties Issues in Expense Recognition: Depreciation and Amortization Implications for Financial Analysts: Expense Recognition Non-­Recurring Items and Non-­Operating Items: Discontinued Operations and Unusual or Infrequent items 8.1 Discontinued Operations 8.2 Unusual or Infrequent Items Non-­Recurring Items: Changes in Accounting Policy Non-­Operating Items Earnings Per Share and Capital Structure and Basic EPS 11.1 Simple versus Complex Capital Structure 11.2 Basic EPS Diluted EPS: the If-­Converted Method 12.1 Diluted EPS When a Company Has Convertible Preferred Stock Outstanding 12.2 Diluted EPS When a Company Has Convertible Debt Outstanding Diluted EPS: the Treasury Stock Method Other Issues with Diluted EPS and Changes in EPS 14.1 Changes in EPS Common-­Size Analysis of the Income Statement 15.1 Common-­Size Analysis of the Income Statement Income Statement Ratios Comprehensive Income Summary Practice Problems Solutions 18 Understanding Balance Sheets Introduction and Components of the Balance Sheet 1.1 Components and Format of the Balance Sheet 1.2 Balance Sheet Components Current and Non-­Current Classification Liquidity-­Based Presentation Current Assets: Cash and Cash Equivalents, Marketable Securities and Trade Receivables 4.1 Current Assets Current Assets: Inventories and Other Current Assets 5.1 Other Current Assets Current liabilities Non-­Current Assets: Property, Plant and Equipment and Investment Property 7.1 Property, Plant, and Equipment 7.2 Investment Property Non-­Current Assets: Intangible Assets 8.1 Identifiable Intangibles Non-­Current Assets: Goodwill Non-­Current Assets: Financial Assets Non-­Current Assets: Deferred Tax Assets Non-­Current Liabilities 12.1 Long-­term Financial Liabilities 12.2 Deferred Tax Liabilities Components of Equity 13.1 Components of Equity Statement of Changes in Equity Common Size Analysis of Balance Sheet 15.1 Common-­Size Analysis of the Balance Sheet Balance Sheet Ratios Summary Practice Problems Solutions 19 Understanding Cash Flow Statements Introduction Classification Of Cash Flows and Non-­Cash Activities 2.1 Classification of Cash Flows and Non-­Cash Activities Cash Flow Statement: Differences Between IFRS and US GAAP Cash Flow Statement: Direct and Indirect Methods for Reporting Cash Flow from Operating Activities Cash Flow Statement: Indirect Method Under IFRS Cash Flow Statement: Direct Method Under IFRS Cash Flow Statement: Direct Method Under US GAAP Cash Flow Statement: Indirect Method Under US GAAP Linkages of Cash Flow Statement with the Income Statement and Balance Sheet 9.1 Linkages of the Cash Flow Statement with the Income Statement and Balance Sheet Preparing the Cash Flow Statement: The Direct Method for Operating Activities 10.1 Operating Activities: Direct Method Preparing the Cash Flow Statement: Investing Activities Preparing the Cash Flow Statement: Financing Activities 12.1 Long-­Term Debt and Common Stock 12.2 Dividends Preparing the Cash Flow Statement: Overall Statement of Cash Flows Under the Direct Method Preparing the Cash Flow Statement: Overall Statement of Cash Flows Under the Indirect Method Conversion of Cash Flows from the Indirect to Direct Method Cash Flow Statement Analysis: Evaluation of Sources and Uses of Cash 16.1 Evaluation of the Sources and Uses of Cash Cash Flow Statement Analysis: Common Size Analysis Cash Flow Statement Analysis: Free Cash Flow to Firm and Free Cash Flow to Equity Cash Flow Statement Analysis: Cash Flow Ratios Summary Practice Problems Solutions 20 Financial Analysis Techniques Introduction 1.1 The Financial Analysis Process Analytical Tools and Techniques Financial Ratio Analysis 3.1 The Universe of Ratios 3.2 Value, Purposes, and Limitations of Ratio Analysis 3.3 Sources of Ratios Common Size Balance Sheets and Income Statements 4.1 Common-­Size Analysis of the Balance Sheet 4.2 Common-­Size Analysis of the Income Statement Cross-­Sectional, Trend Analysis & Relationships in Financial Statements 5.1 Trend Analysis6 5.2 Relationships among Financial Statements The Use of Graphs and Regression Analysis 6.1 Regression Analysis Common Ratio Categories & Interpretation and Context 7.1 Interpretation and Context Activity Ratios 8.1 Calculation of Activity Ratios 8.2 Interpretation of Activity Ratios Liquidity Ratios 9.1 Calculation of Liquidity Ratios 9.2 Interpretation of Liquidity Ratios Solvency Ratios 10.1 Calculation of Solvency Ratios 10.2 Interpretation of Solvency Ratios Profitability Ratios 11.1 Calculation of Profitability Ratios 11.2 Interpretation of Profitability Ratios Integrated Financial Ratio Analysis 12.1 The Overall Ratio Picture: Examples DuPont Analysis: The Decomposition of ROE Equity Analysis and Valuation Ratios 14.1 Valuation Ratios Industry-­Specific Financial Ratios Research on Financial Ratios in Credit and Equity Analysis Credit Analysis 17.1 The Credit Rating Process 17.2 Historical Research on Ratios in Credit Analysis Business and Geographic Segments 18.1 Segment Reporting Requirements 18.2 Segment Ratios Model Building and Forecasting Summary Practice Problems Solutions 7 Financial Statement Analysis (3) 21 Inventories Introduction Cost of inventories Inventory valuation methods 3.1 Specific Identification 3.2 First-­In, First-­Out (FIFO) 3.3 Weighted Average Cost 3.4 Last-­In, First-­Out (LIFO) Calculations of cost of sales, gross profit, and ending inventory Periodic versus perpetual inventory systems Comparison of inventory valuation methods The LIFO method and LIFO reserve 7.1 LIFO Reserve LIFO liquidations Inventory method changes Inventory adjustments Evaluation of inventory management: Disclosures & ratios 11.1 Presentation and Disclosure 11.2 Inventory Ratios Illustrations of inventory analysis: Adjusting LIFO to FIFO Illustrations of inventory analysis: Impacts of writedowns Summary Practice Problems Solutions 22 Long-­Lived Assets Introduction & Acquisition of Property, Plant and Equipment 1.1 Introduction 1.2 Acquisition of Long-­Lived Assets 1.3 Property, Plant, and Equipment Acquisition of Intangible Assets 2.1 Intangible Assets Purchased in Situations Other Than Business Combinations 2.2 Intangible Assets Developed Internally 2.3 Intangible Assets Acquired in a Business Combination Capitalization versus Expensing: Impact on Financial Statements and Ratios Capitalisation of Interest Costs Capitalisation of Interest and Internal Development Costs Depreciation of Long-­Lived Assets: Methods and Calculation 6.1 Depreciation Methods and Calculation of Depreciation Expense Amortisation of Long-­Lived Assets: Methods and Calculation The Revaluation Model Impairment of Assets 9.1 Impairment of Property, Plant, and Equipment 9.2 Impairment of Intangible Assets with a Finite Life 9.3 Impairment of Intangibles with Indefinite Lives 9.4 Impairment of Long-­Lived Assets Held for Sale 9.5 Reversals of Impairments of Long-­Lived Assets Derecognition 10.1 Sale of Long-­Lived Assets 10.2 Long-­Lived Assets Disposed of Other Than by a Sale Presentation and Disclosure Requirements Using Disclosures in Analysis Investment Property Summary Practice Problems Solutions 23 Income Taxes Introduction Differences Between Accounting Profit and Taxable Income Current and Deferred Tax Assets and Liabilities 3.1 Deferred Tax Assets and Liabilities Determining the Tax Base of Assets and Liabilities 4.1 Determining the Tax Base of an Asset 4.2 Determining the Tax Base of a Liability Changes in Income Tax Rates Temporary and Permanent Differences Between Taxable and Accounting Profit 6.1 Taxable Temporary Differences 6.2 Deductible Temporary Differences 6.3 Examples of Taxable and Deductible Temporary Differences Exceptions to the Usual Rules for Temporary Differences 7.1 Business Combinations and Deferred Taxes 7.2 Investments in Subsidiaries, Branches, Associates and Interests in Joint Ventures Unused Tax Losses and Tax Credits Recognition and Measurement of Current and Deferred Tax 9.1 Recognition of a Valuation Allowance 9.2 Recognition of Current and Deferred Tax Charged Directly to Equity Presentation and Disclosure Comparison of IFRS and US GAAP Summary Practice Problems Solutions 24 Non-­Current (Long-­Term) Liabilities Introduction Bonds Payable & Accounting for Bond Issuance 2.1 Accounting for Bond Issuance Accounting for Bond Amortisation, Interest Expense, and Interest Payments Accounting for Bonds at Fair Value Derecognition of Debt Debt Covenants Presentation and Disclosure of Long-­Term Debt Leases 8.1 Examples of Leases 8.2 Advantages of Leasing 8.3 Lease Classification as Finance or Operating 8.4 Financial Reporting of Leases 8.5 Lessee Accounting—IFRS 8.6 Lessee Accounting—US GAAP 8.7 Lessor Accounting Introduction to Pensions and Other Post-­Employment Benefits Evaluating Solvency: Leverage and Coverage Ratios Summary Practice Problems Solutions 8 Financial Statement Analysis (4) 25 Financial Reporting Quality Introduction & Conceptual Overview 1.1 Conceptual Overview GAAP, Decision Useful Financial Reporting 2.1 GAAP, Decision-­Useful, but Sustainable? Biased Accounting Choices 3.1 Within GAAP, but “Earnings Management” Departures from GAAP Differentiate between Conservative and Aggressive Accounting 5.1 Conservatism in Accounting Standards 5.2 Bias in the Application of Accounting Standards Context for Assessing Financial Reporting Quality: Motivations and Conditions Conducive to Issuing Low Quality Financial Reports 6.1 Motivations 6.2 Conditions Conducive to Issuing Low-­Quality Financial Reports Mechanisms That Discipline Financial Reporting Quality 7.1 Market Regulatory Authorities 7.2 Auditors 7.3 Private Contracting Detection of Financial Reporting Quality Issues: Introduction & Presentation Choices 8.1 Presentation Choices Accounting Choices and Estimates and How Accounting Choices and Estimates Affect Earnings and Balance Sheets 9.1 How Accounting Choices and Estimates Affect Earnings and Balance Sheets How Choices that Affect the Cash Flow Statement Choices that Affect Financial Reporting Warning Signs 1) Pay attention to revenue. 2) Pay attention to signals from inventories. 3) Pay attention to capitalization policies and deferred costs. 4) Pay attention to the relationship of cash flow and net income. 5) Other potential warnings signs. Summary Practice Problems Solutions 26 Applications of Financial Statement Analysis Introduction & Evaluating Past Financial Performance 1.1 Application: Evaluating Past Financial Performance Application: Projecting Future Financial Performance as an Input to Market Based Valuation 2.1 Projecting Performance: An Input to Market-­Based Valuation Projecting Multiple-­Period Performance Application: Assessing Credit Risk Screening for Potential Equity Investments Framework for Analyst Adjustments & Adjustments to Investments & Adjustments to Inventory 6.1 A Framework for Analyst Adjustments 6.2 Analyst Adjustments Related to Investments 6.3 Analyst Adjustments Related to Inventory Adjustments Related to Property, Plant, and Equipment Adjustments Related to Goodwill Summary Practice Problems Solutions Corporate Issuers 9 Corporate Issuers (1) 27 Introduction to Corporate Governance and Other ESG Considerations Introduction and Overview of Corporate Governance 1.1 Corporate Governance Overview Stakeholder Groups 2.1 Stakeholder Groups Principal–Agent and Other Relationships in Corporate Governance 3.1 Shareholder and Manager/Director Relationships 3.2 Controlling and Minority Shareholder Relationships 3.3 Manager and Board Relationships 3.4 Shareholder versus Creditor Interests 3.5 Other Stakeholder Conflicts Overview and Mechanisms of Stakeholder Management 4.1 Overview of Stakeholder Management 4.2 Mechanisms of Stakeholder Management Mechanisms to Mitigate Associated Stakeholder Risks 5.1 Employee Laws and Contracts 5.2 Contractual Agreements with Customers and Suppliers 5.3 Laws and Regulations Company Boards and Committees 6.1 Composition of the Board of Directors 6.2 Functions and Responsibilities of the Board 6.3 Board of Directors Committees Relevant Factors in Analyzing Corporate Governance and Stakeholder Management 7.1 Market Factors 7.2 Non-­Market Factors Risks and Benefits of Corporate Governance and Stakeholder Management 8.1 Risks of Poor Governance and Stakeholder Management 8.2 Benefits of Effective Governance and Stakeholder Management Factors Relevant to Corporate Governance and Stakeholder Management Analysis 9.1 Economic Ownership and Voting Control 9.2 Board of Directors Representation 9.3 Remuneration and Company Performance 9.4 Investors in the Company 9.5 Strength of Shareholders’ Rights 9.6 Managing Long-­Term Risks 9.7 Summary of Analyst Considerations ESG Considerations for Investors and Analysts 10.1 Introduction to Environmental, Social, and Governance issues 10.2 ESG Investment Strategies 10.3 ESG Investment Approaches 10.4 Catalysts for Growth in ESG Investing 10.5 ESG Market Overview 10.6 ESG Factors in Investment Analysis Summary Practice Problems Solutions 28 Uses of Capital Introduction The Capital Allocation Process Investment Decision Criteria 3.1 Net Present Value 3.2 Internal Rate of Return 3.3 Corporate Usage of Capital Allocation Methods Real Options 4.1 Timing Options 4.2 Sizing Options 4.3 Flexibility Options 4.4 Fundamental Options Common Capital Allocation Pitfalls Summary Practice Problems Solutions 29 Sources of Capital Introduction Corporate Financing Options 2.1 Internal Financing 2.2 Financial Intermediaries 2.3 Capital Markets 2.4 Other Financing 2.5 Considerations Affecting Financing Choices Managing and Measuring Liquidity 3.1 Defining Liquidity Management 3.2 Measuring Liquidity Evaluating Short-­Term Financing Choices Summary Practice Problems Solutions