It is certainly possible to learn everything you need to know about financial reporting and analysis (for both Level I and Level II) without understanding fully credits and debits, but it is unquestionably more difficult than if you do understand them.  The good news is that they’re not difficult to understand. Income statements gave rise […]

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A useful skill to develop is that of writing out a quick, simple, general income statement. Here is an example that you should be able to reproduce in 10 – 15 seconds during the exam: \begin{align}&\ \ Sales\\ &\underline{–\ COGS}\\ &=\ Gross\ Profit\\ &\underline{–\ SG\&A}\\ &=\ EBITDA\\ &–\ Depreciation\\ &\underline{–\ Amortization}\\ &=\ EBIT\\ &\underline{–\ Interest}\\ […]

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FRA is unquestionably one of the more difficult topic areas for Level I candidates, because it requires memorization of a lot of ideas, rather than developing those ideas from first principles.  There are, however, some ideas in FRA that can be developed from first principles, which will make them easier to recall on exam day.  […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level I Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership

This will give you access to this and all other articles at that membership level.