CFA lv1 - account

  1. interest burden ratio
  2. tax burden ratio
  3. financial leverage
  4. ROE
  5. DTA when
    • Asset: T>B
    • tax expense > tax payable
    • taxable income > book
  6. double declining balance technique
    • 1. 1/useful life *2 = dpn rate
    • 2. residual value not considered initially, but considered during dpn
  7. for a mature company, its operating cash flow compared to NI is
  8. diluted EPS technique
    • 1. [NI-preferred dividend+ convertible int (1-t)]/ weighted average shares
    • 2.stock option assume outstanding for whole period and account for subsequent stock repurchase
    • 3. warrant = (market - exercise) / market * no. of warrant
    • 4. time factor!
  9. ROE =
    • tax burden * interest burden * EBIT margin * asset turnover * financial leverage
    • first 3 component is net profit margin
  10. Fixed charge coverage (FCC) ratio
    (EBIT + lease payment)/(interest payment + lease payment)
  11. fifo cogs =
    lifo cogs - change in lifo reserve
  12. fifo inventory =
    lifo inventory + lifo reserve
  13. for leasee in finance lease, NI and ROE is xx in early years and gradually rise during lease life; working capital and asset turnover is XX; D/E is XX
    lower; lower; higher;
  14. capitalising an expenditure change cash flow classification ...; net income, asset and equity is XX; D/E and D/A is XX
    • from operating cash outflow to investing cash outflow; income variability is XX
    • higher; lower; lower
  15. advantage of lease for lessee
    lower finance cost than buying the asset
  16. advantage of lease for lessor
    • interest expense tax benefits
    • economies of scale in servicing the asset
  17. completed contract method, percentage of completion method and installment method
    • 1. only when entire project completed and outcome cannot be reliably estimated
    • 2. recognise according to cost incurred as % of total estimated cost and payment assured
    • 3. recognise according to cash received if collectibility cannot be reliably estimated
  18. US GAAP cash flow recognise interest income/divdend received as XX, and dividend paid is XX
    operating, financing
  19. IFRS cash flow recognise income/divdend received as XX
    operating or investing
  20. current ratio > 1 implies
    CA > CL
  21. finance lease results in XX current ratio
  22. during rising price, LIFO reports
    higher COGS, lower earnings, lower tax and lower inventory
  23. to increase earnings, management may
    capitalise an expense
  24. under US GAAP, an asset is impaired when
    book value greater than sum of undiscounted cash flows
  25. CCC
    • days sales + days inventory - days payable
    • days sales = 365 / receivable turnover (credit sales / receivable)
  26. financial service firms typically have
    high dividend payout
  27. Free cash flow to the firm
    cash from operation + interest expense net of tax - capex
  28. past service cost of defined benefit plan under IFRS and US GAAP
    • IFRS: PL
    • US: OCI and amortised to PL
  29. restructuring cost results in DTX
    DTA because the expense is not deducted until a later date
  30. intangible asset renewable at minimal cost is regards as having
    indefinite life
Card Set
CFA lv1 - account
CFA lv1 - account