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Comprehensive Questions & Answers Chartered Financial Analyst (CFA)
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Comprehensive Questions & Answers Chartered Financial Analyst (CFA)
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Comprehensive Questions &Answers Chartered Financial
Analyst (CFA)
Comprehensive Income - //It is a more inclusive measure that
includes all changes in equity except for owner contributions and
distributions. That is, comprehensive income is the sum of net
income and other comprehensive income.
Other Comprehensive Income - //Are all costs and gains from
items not in the income statement. Items such as:
1 . Foreign currency translation gains and losses.
2. Adjustments for minimum pension liability.
3 . Unrealized gains and losses from cash flow hedging
derivatives.
4 . Unrealized gains and losses from available-for-sale securities.
Available-for-sale securities - //They are not expected to be held
to maturity. The appreciation or loss is reported on the Stock
Holder's Equity as a component of comprehensive income.
Barter Transactions - //Revenue from barter transactions can only
be recognized if its fair value can be estimated from historical
data on similar non-barter transactions.
Aggressive Revenue Reporting - //is when revenue is reported
earlier, which will inflate current period revenue reporting,
, Percentage of Completion method is more aggressive than
completed contract method.
Basic EPS - //= [Net Income - Preferred Dividends]/ [Weighted
Avg. Number of Shares Outstanding]
Assets - //Resources controlled as a result of past transactions
that are expected to provide future economic benefit
Liabilities - //Obligations as a result of past events that are
expected to require an outflow of economic resources
Equity - //The owners' residual interest in the assets after
deducting the liabilities. Also known as: Stockholders' equity,
shareholders' equity, or net assets
What are the limitations of the balance sheet in financial analysis?
- //For example, some assets are reported at historical cost, some
are reported at amortized cost, and others may be reported at fair
value. There are numerous valuation bases. Even if the balance
sheet was reported at fair value, the value may have changed
since the balance sheet date. Also, there are a number of assets
and liabilities that do not
appear on the balance sheet but certainly have value. For
example, the value of a firm's employees and reputation is not
reported on the balance sheet.
Liquidity - //The ability to meet short-term obligations
Solvency - //The ability to meet long-term obligations.
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