Module 25.2 LOS 20.f: Hostile Takeover Defenses
There are pre-offer and post-offer defenses for a hostile takeover. Post-offer defenses are more difficult to execute as there is …
CFA Level II
Module 25.1 LOS 20.b: Rationale for Mergers
The outlines several common reasons that mergers may occur for: Synergies – the concept that the combined company will be …
Module 20.3 LOS 20.i: Economic profit, residual income, and claims valuation models
Economic profit is a measure of profit in excess of the dollar cost of capital invested in a project: EP = …
Module 20.2 LOS 20.c: Evaluating Projects with Unequal Lives, Replicable or Not
When two projects are mutually exclusive, the firm may choose one project or the other, but not both. If mutually exclusive …
Module 19.7 LOS 19.c: Restating a Balance Sheet for an Operating Lease
Normally, an operating lease is neither and asset or liability. Lessees only report rental expense on the income statement. When …
Module 19.2 LOS 19.b: Sources of Earnings and Return on Equity
The DuPont decomposition allows us to identify a firm’s performance drivers, allowing us to expose effects of weaker areas of …
Module 18.2 LOS 18.e and 18.f: Indicators of earnings quality and the concept of sustainable earnings
High-quality earnings are characterized by two elements: Sustainable: high-quality earnings tend to persist in the future. Adequate: high-quality earnings cover …
Module 18.3 LOS 18.h: Evaluate the earnings of a company
Earnings recognition can be subjective; therefore, analysts should assess the quality of earnings, not just the value. There are many …
Module 15.1 LOS 15.a: Defined Contribution Plan vs Defined Benefit Plan
A defined contribution plan is a retirement plan whereby the firm contributes a certain sum each period to the employee’s retirement account. …
Module 14.6 and 14.7: Accounting for Business Combinations
We can use the pooling of interest method, the pooling of interests methods or the acquisition method to account for …