Schweser Notes CFA Level I Book 2 Financial Statement Analysis

Book 2: Financial Statement Analysis
Learning Outcome Statements (LOS)
Reading 16 Introduction to Financial Statement Analysis
	Exam Focus
	Module 16.1: Financial Statement Roles
	Module 16.2: Footnotes, Audit, and Analysis
	Key Concepts
		LOS 16.a
		LOS 16.b
		LOS 16.c
		LOS 16.d
		LOS 16.e
		LOS 16.f
	Answer Key for Module Quizzes
Reading 17 Financial Reporting Standards
	Exam Focus
	Module 17.1: Standards Overview
	Module 17.2: Financial Reporting Framework
		Qualitative Characteristics
		Required Reporting Elements
		Constraints and Assumptions
	Key Concepts
		LOS 17.a
		LOS 17.b
		LOS 17.c
		LOS 17.d
		LOS 17.e
	Answer Key for Module Quizzes
Reading 18 Understanding Income Statements
	Exam Focus
	Module 18.1: Income Statement Overview
		Presentation Formats
	Module 18.2: Revenue Recognition
	Module 18.3: Expense Recognition
		Inventory Expense Recognition
		Depreciation Expense Recognition
		Amortization Expense Recognition
		Bad Debt Expense and Warranty Expense Recognition
		Implications for Financial Analysis
		Non-Recurring Items
		Changes in Accounting Policies and Estimates
	Module 18.4: EPS and Dilutive Securities
		Basic EPS
			Effect of Stock Dividends and Stock Splits
		Diluted EPS
	Module 18.5: Common-Size Income Statements
		U.S. GAAP
		IFRS
	Key Concepts
		LOS 18.a
		LOS 18.b
		LOS 18.c
		LOS 18.d
		LOS 18.e
		LOS 18.f
		LOS 18.g
		LOS 18.h
		LOS 18.i
		LOS 18.j
		LOS 18.k
		LOS 18.l
	Answer Key for Module Quizzes
Reading 19 Understanding Balance Sheets
	Exam Focus
	Module 19.1: Balance Sheet Introduction
	Module 19.2: Assets and Liabilities
	Module 19.3: Current Assets and Liabilities
		Current Assets
		Current Liabilities
	Module 19.4: Noncurrent Assets and Liabilities
	Module 19.5: Intangible Assets
	Module 19.6: Marketable Securities
		IFRS Treatment of Marketable Securities
		Non-Current Liabilities
	Module 19.7: Shareholders’ Equity and Ratios
	Key Concepts
		LOS 19.a
		LOS 19.b
		LOS 19.c
		LOS 19.d
		LOS 19.e
		LOS 19.f
		LOS 19.g
		LOS 19.h
	Answer Key for Module Quizzes
Reading 20 Understanding Cash Flow Statements
	Exam Focus
	Module 20.1: Cash Flow Introduction
		Direct Method
		Indirect Method
		Arguments in Favor of Each Method
			Disclosure Requirements
	Module 20.2: The Direct and Indirect Methods
		Direct Method
		Indirect Method
	Module 20.3: Converting Indirect to Direct
		Major Sources and Uses of Cash
		Operating Cash Flow
		Investing Cash Flow
		Financing Cash Flow
		Common-Size Cash Flow Statement
	Module 20.4: Free Cash Flow and Ratios
		Free Cash Flow to the Firm
		Free Cash Flow to Equity
		Other Cash Flow Ratios
			Performance Ratios
			Coverage Ratios
	Key Concepts
		LOS 20.a
		LOS 20.b
		LOS 20.c
		LOS 20.d
		LOS 20.e
		LOS 20.f
		LOS 20.g
		LOS 20.h
		LOS 20.i
	Answer Key for Module Quizzes
Reading 21 Financial Analysis Techniques
	Exam Focus
	Module 21.1: Introduction to Financial Ratios
		Ratio Analysis
		Common-Size Analysis
		Graphical Analysis
		Regression Analysis
	Module 21.2: Financial Ratios, Part 1
		Activity Ratios
		Liquidity Ratios
	Module 21.3: Financial Ratios, Part 2
		Solvency Ratios
		Profitability Ratios
	Module 21.4: DuPont Analysis
	Module 21.5: More Financial Ratios
		Dividends
		Business Risk
		Credit Analysis
	Key Concepts
		LOS 21.a
		LOS 21.b
		LOS 21.c
		LOS 21.d
		LOS 21.e
		LOS 21.f
		LOS 21.g
	Answer Key for Module Quizzes
Reading 22 Inventories
	Exam Focus
	Module 22.1: Cost Flow Methods
	Module 22.2: Inventory Systems
	Module 22.3: Converting LIFO to FIFO
		Effects on Ratios
		LIFO Liquidation
	Module 22.4: Inventory Valuation
		Inventory Changes
	Module 22.5: Inventory Analysis
		Analysis of Viper’s Ratios Relative to a Group of Industry Peers
	Key Concepts
		LOS 22.a
		LOS 22.b
		LOS 22.c
		LOS 22.d
		LOS 22.e
		LOS 22.f
		LOS 22.g
		LOS 22.h
		LOS 22.i
		LOS 22.j
		LOS 22.k
		LOS 22.l
	Answer Key for Module Quizzes
Reading 23 Long-Lived Assets
	Exam Focus
	Module 23.1: Capitalization vs. Expensing
		Capitalized Interest
		Intangible Assets Created Internally
		Purchased Intangible Assets
		Intangible Assets Obtained in a Business Combination
			Net Income
			Shareholders’ Equity
			Cash Flow From Operations
			Financial Ratios
	Module 23.2: Depreciation
		Depreciation Methods
		Component Depreciation
		Useful Lives and Salvage Values
	Module 23.3: Impairment and Revaluation
		First Revaluation Date
		Subsequent Revaluation Dates
		Impairments Under IFRS
		Impairments Under U.S. GAAP
		Intangible Assets With Indefinite Lives
		Long-Lived Assets Held for Sale
		Analysis of Impairments
		Revaluation
		Derecognition of Assets
	Module 23.4: Fixed Asset Disclosures
		IFRS Disclosures
		U.S. GAAP Disclosures
			Average Age
			Total Useful Life
			Remaining Useful Life
	Key Concepts
		LOS 23.a
		LOS 23.b
		LOS 23.c
		LOS 23.d
		LOS 23.e
		LOS 23.f
		LOS 23.g
		LOS 23.h
		LOS 23.i
		LOS 23.j
		LOS 23.k
		LOS 23.l
		LOS 23.m
		LOS 23.n
	Answer Key for Module Quizzes
Reading 24 Income Taxes
	Exam Focus
	Module 24.1: Tax Terms
		Tax Return Terminology
		Financial Reporting Terminology
	Module 24.2: Deferred Tax Liabilities and Assets
		Deferred Tax Liabilities
		Deferred Tax Assets
		Treatment for Analytical Purposes
		Tax Base of Assets
		Tax Base of Liabilities
	Module 24.3: Change in Tax Rates
	Module 24.4: Permanent Differences
		Analyzing the Effective Tax Rate Reconciliation
	Key Concepts
		LOS 24.a
		LOS 24.b
		LOS 24.c
		LOS 24.d
		LOS 24.e
		LOS 24.f
		LOS 24.g
		LOS 24.h
		LOS 24.i
		LOS 24.j
	Answer Key for Module Quizzes
Reading 25 Non-Current (Long-Term) Liabilities
	Exam Focus
	Module 25.1: Bond Issuance
		Bond Terminology
		Bonds Issued at Par
		Bonds Issued at a Discount or Premium
		Balance Sheet Measurement
	Module 25.2: Discount and Premium Bonds
	Module 25.3: Issuance Cost, Derecognition, and Disclosures
		Issuance Costs
		Fair Value Reporting Option
		Summary of Financial Statement Effects of Issuing a Bond
	Module 25.4: Lease and Pension Accounting
		Leverage Ratios
		Coverage Ratios
	Key Concepts
		LOS 25.a
		LOS 25.b
		LOS 25.c
		LOS 25.d
		LOS 25.e
		LOS 25.f
		LOS 25.g
		LOS 25.h
		LOS 25.i
		LOS 25.j
	Answer Key for Module Quizzes
Reading 26 Financial Reporting Quality
	Exam Focus
	Module 26.1: Reporting Quality
	Module 26.2: Accounting Choices and Estimates
		Revenue Recognition
		Estimates of Credit Losses
		Valuation Allowance
		Depreciation Methods and Estimates
		Amortization and Impairment
		Inventory Method
		Related-Party Transactions
		Capitalization
		Other Cash Flow Effects
	Module 26.3: Warning Signs
		Revenue Recognition
		Inventories
		Capitalization Policies
		Relationship of Revenue and Cash Flow
		Other Warning Signs
	Key Concepts
		LOS 26.a
		LOS 26.b
		LOS 26.c
		LOS 26.d
		LOS 26.e
		LOS 26.f
		LOS 26.g
		LOS 26.h
		LOS 26.i
	Answer Key for Module Quizzes
Reading 27 Applications of Financial Statement Analysis
	Exam Focus
	Module 27.1: Forecasting
	Module 27.2: Credit and Equity Analysis
		Investments in Securities
		Inventory Accounting Differences
		Differences in Depreciation Methods and Estimates
		Goodwill
	Key Concepts
		LOS 27.a
		LOS 27.b
		LOS 27.c
		LOS 27.d
		LOS 27.e
	Answer Key for Module Quizzes
	Topic Quiz: Financial Statement Analysis
FORMULAS
INDEX