CFA L1 S9

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CFA Level I
Session 9

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Discuss ratios useful for evaluating inventory management: .
Determine the effects of changing interest rates on the market value of debt and on financial statements and ratios: .
Analyze disclosures relating to deferred tax items and the effective tax rate reconciliation, and discuss how information included in these disclosures affects a company's financial statements and financial ratios: .
Distinguish between a sales-type lease and a direct financing lease, and determine the effects on the financial statements and ratios of the lessors: .
Compare and contrast a company's deferred tax items and effective tax rate reconciliation between reporting periods: .
Explain the differences between accounting profit and taxable income, and define key terms including deferred tax assets, deferred tax liabilities, valuation allowance, taxes payable, and income tax expense: .
Evaluate the impact of tax rate changes on a company's financial statements and ratios: .
Describe the presentation of, and disclosures relating to, financing liabilities: .
Discuss the reasons that a LIFO reserve might rise or decline during a given period and discuss the implications for financial analysis: .
Calculate income tax expense, income taxes payable, deferred tax assets and deferred tax liabilities, and calculate and interpret the adjustment to the financial statements related to a change in the income tax rate: .
Analyze the financial statements of companies using different inventory accounting methods to compare and describe the effect of the different methods on cost of goods sold, inventory balances, and other financial statement items; and compute and describe the effects of the choice of inventory method on profitability, liquidity, activity, and solvency ratios: .
Explain the accounting standards related to the capitalization of expenditures as part of long-lived assets, including interest costs: .
Explain the circumstances in which software development costs and research and development costs are capitalized: .
Discuss the liability for closure, removal, and environmental effects of long-lived operating assets, and discuss the financial statement impact and ratio effects of that liability: .
Distinguish between temporary and permanent items in pretax financial income and taxable income: .
Describe the types and economic consequences of off-balance-sheet financing, and determine how take-or-pay contracts, throughput arrangements, and the sale of receivables affect financial statements and selected financial ratios: .
Describe amortization of intangible assets with finite useful lives, and the estimates that affect the amortization calculations: .
Identify the key provisions of and differences between income tax accounting under IFRS and U.S. GAAP: .
Discuss the motivations for leasing assets instead of purchasing them and the incentives for reporting the leases as operating leases rather than finance leases: .
Calculate adjustments to reported financial statements related to inventory assumptions in order to aid in comparing and evaluating companies: .
Discuss the use of fixed asset disclosures to compare companies' average age of depreciable assets, and calculate, using such disclosures, the average age and average depreciable life of fixed assets: .
Explain how deferred tax liabilities and assets are created and the factors that determine how a company's deferred tax liabilities and assets should be treated for the purposes of financial analysis: .
Discuss how inventories are reported in the financial statements and how the lower of cost or net realizable value is used and applied: .
Calculate and describe both the initial and long-lived effects of asset revaluations on financial ratios: .
Identify the different depreciation methods for long-lived tangible assets and discuss how the choice of method, useful lives, and salvage values affect a company's financial statements, ratios, and taxes: .
Compute ending inventory balances and cost of goods sold using the FIFO, weighted average cost, and LIFO methods to account for product inventory and explain the relationship among and the usefulness of inventory and cost of goods sold data provided by the FIFO, weighted average cost, and LIFO methods when prices are 1) stable, 2) decreasing, or 3) increasing: .
Compute the effects of debt issuance and amortization of bond discounts and premiums on financial statements and ratios: .
Discuss the implications of a valuation allowance for deferred tax assets (i.e., when it is required, what impact it has on financial statements, and how it might affect an analyst's view of a company): .
Describe two types of debt with equity features (convertible debt and debt with warrants) and calculate the effect of issuance of such instruments on a company's debt ratios: .
Explain the role of debt covenants in protecting creditors by restricting a company's ability to invest, pay dividends, or make other operating and strategic decisions: .
Determine the effects of finance and operating leases on the financial statements and ratios of the lessees and lessors: .
Explain IFRS and U.S. GAAP rules for determining inventory cost including which costs are capitalized and methods of allocating costs between cost of goods sold and inventory: .
Determine the tax base of a company's assets and liabilities: .
Define impairment of long-lived tangible and intangible assets and explain what effect such impairment has on a company's financial statements and ratios: .
Discuss the impact of sales or exchanges of long-lived assets on financial statements: .
Compute and describe the effects of capitalizing versus expensing on net income, shareholders' equity, cash flow from operations, and financial ratios including the effect on the interest coverage ratio of capitalizing interest costs: .

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Number of cards 36