These CFA® Level I Financial Statement Analysis (FSA) Notes for 2025 are a complete 224-page exam-focused companion written by a successful CFA candidate. Meticulously organized around the CFA Institute’s Learning Outcome Statements (LOS), this guide provides all essential tools for analyzing, interpreting, and evaluating financial statements across real-world business contexts.
Understanding financial statements is central to investment decision-making. This material is crafted for CFA Level I candidates seeking a concise, structured, and practical approach to one of the most heavily weighted and vital topics on the exam.
Key Topics Covered:
1. Introduction to Financial Statement Analysis
Lays the groundwork for understanding financial reports, highlighting the objectives of FSA, the standard-setting bodies, IFRS vs. GAAP, and the importance of consistency and comparability.
2. Analyzing Income Statements
Breaks down components of the income statement, including revenue recognition, expense matching, operating vs. non-operating income, and profit margins. Includes vertical and horizontal analysis techniques.
3. Analyzing Balance Sheets
Covers asset, liability, and equity classifications, fair value vs. historical cost, liquidity assessment, leverage ratios, and the importance of balance sheet interpretation in assessing financial health.
4 & 5. Analyzing Statements of Cash Flows (Parts 1 & 2)
Details the direct and indirect methods, operating vs. investing vs. financing cash flows, non-cash adjustments, and the cash flow to debt coverage analysis. A critical section for evaluating a firm’s liquidity and solvency.
6. Analysis of Inventories
Explores inventory valuation methods (FIFO, LIFO, weighted average), implications on financial ratios, tax consequences, and accounting differences under IFRS and US GAAP.
7. Analysis of Long-Term Assets
Includes topics on capitalized costs, depreciation methods (SL, DDB, units of production), impairment, revaluation, and how long-term assets affect earnings and book value.
8. Topics in Long-Term Liabilities and Equity
Covers bond issuance, amortization of premiums/discounts, lease classification, preferred and common equity, and equity-related disclosures.
9. Analysis of Income Taxes
Focuses on deferred tax assets and liabilities, temporary vs. permanent differences, effective tax rate analysis, and the implications of changes in tax laws.
10. Financial Reporting Quality
Discusses earnings management, red flags in reporting, aggressive vs. conservative accounting choices, and how to detect distortions in reported numbers.
11. Financial Analysis Techniques
Equips you with profitability, liquidity, solvency, and activity ratio tools. Includes DuPont analysis, common-size statements, and forecasting based on historical trends.
12. Introduction to Financial Statement Modeling
Introduces the basics of building forward-looking models using historical financials. Covers basic pro forma income statement and balance sheet construction, and sensitivity analysis.
Why This Resource Stands Out:
- Detailed Yet Concise: Breaks down complex concepts into digestible insights
- Illustrated with Examples: Uses tables, formulas, and visuals for quick understanding
- Tailored for CFA Level I 2025 Curriculum: 100% aligned with the latest CFA Institute syllabus
- Author Expertise: Created by a passed CFA candidate, ensuring clarity and strategic exam prep
- Concept to Application Bridge: Moves beyond definitions to application in investment analysis
This resource is perfect for CFA Level I candidates, finance undergraduates, accounting interns, and investment analysts. Whether you’re preparing for the exam or want to sharpen your ability to read and interpret financial reports, this comprehensive guide gives you the confidence and knowledge needed to succeed.
Best Suited For:
- CFA Level I exam takers
- Aspiring analysts and financial modelers
- Professionals seeking a refresher in accounting fundamentals
- University students in finance, business, or economics
This is your go-to reference to master one of the most critical sections in CFA Level I. Solidify your understanding and strengthen your analysis with these in-depth, exam-proven notes.
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