Module 20.3 LOS 20.h: Economic Income in capital budgeting
A project’s economic income is the after-tax cash flow plus the change in the investment’s market value. Interest is ignored for cash …
financial reporting and analysis
Module 19.5 LOS 19.e: Balance Sheet Accruals Ratios
The fewer accrual accounting adjustments that are made from operating cash flow, the higher the earnings quality will be. We …
Module 17.2 – 17.5: CAMELS: Capital Adequacy and Liquidity Position
CAMELS is an acronym for the six factor analysis of bank health. It covers capital adequacy, asset quality, management, earnings, …
Module 17.1 LOS 17.b: Capital Requirements of Financial Institutions
Financial institutions must meet the Basel III minimum standards for capital levels, liquidity and stable funding. The Basel III standards …
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 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 …
Module 15.6 LOS 15.e and 15.f: Analyst Adjustments for Evaluating a Pension Plan
To make comparative financial statement analysis easier, analysts can make several adjustments to pension accounting. Using net pension assets and …