Unlocking Applications in Financial Statement Analysis for the CFA Level 1 Exam

PREREQUISITE LESSON

This lesson is a prerequisite for the course. While you won’t be directly tested on its content in the exam, it’s assumed you’ve gained this knowledge or skill during your university studies. We strongly recommend reviewing this lesson, as its content may be essential for understanding subsequent parts of the curriculum.

Welcome to the fascinating world of financial statement analysis applications! In this article, we will explore some of the most relevant applications in the field, helping you prepare for the CFA Level 1 Exam. Let’s get started!

Analyzing Past and Forecasting Future Performance

Ever wondered what it would be like to be a financial time traveller? Well, now you can find out! This lesson will equip you with the tools to delve into a company’s financial past using ratio and common-size analysis. But wait, there’s more! You’ll also learn how to predict the future with financial forecasting. Imagine being able to tell if a company will be swimming in cash or if it’s time to inflate the life rafts.

► Time to put on your time traveller’s hat and start your journey here.

Credit Quality Assessment and Equity Screening

Strap on your detective glasses as we delve into credit quality assessment and equity screening. Master the art of analysing a company’s creditworthiness through the 3 ‘C’s, and explore the role of credit rating agencies. Then, get your hands dirty with equity screening strategies, learning to discern between growth, value, and income stocks, and the importance of multifactor screening.

►Start cracking the case of financial statement analysis here.

Adjusting Financial Statements for Comparability

Ever wished financial statements came with an ‘Adjust Contrast’ button? Well, this lesson is your next best thing. From understanding how to adjust for different investment securities classifications to decoding the differences between IFRS and US GAAP, you’ll be making those financials sharper than a chef’s knife. You’ll also learn to handle the LIFO/FIFO debate, and you’ll get the lowdown on adjusting for depreciation and intangible assets. It’s a bit like playing with the brightness and contrast settings, but for financial statements!

► Turn up the brightness on your financial statement analysis skills here.