Week 6: Economics & Financial Reporting and Analysis

I hope last week wasn’t too intense? Did you opt to go through economics using a study guide? Or are you sticking to the underlying curriculum? As usual please fill in the weekly progress report to record your results.

Please do feel free to send me an email at info@financialexamacademy.com and tell me how your studies are progressing, and/or if you have questions about your study plan. I answer all questions (as long as they are about the CFA® exam :-).

This week we are going to wrap up the last reading in Economics and then we are facing our first brush with the much dreaded Financial Reporting & Analysis (FRA) topic area. I hope the last two weeks were not too intense? If it is any consolation the past two weeks are arguably the toughest to get through in your 21 week study program, so if you are still with me it is all going to be downhill from here. If you are still missing a bit I would recommend that you try and wrap this up by Sunday night, as you don’t want to get too far behind the curve.
Are you making sure to complete all of the end of chapter questions? Having mastered these will improve your odds of exam success, as many candidates will not do this.

Financial Reporting & Analysis

The FRA topic area really divides opinions, some people cannot stand accounting, and some people think it is great (mainly accountants..). If you can learn to like it you will have an edge over the many candidates that get turned off and don’t study it properly. It is the largest topic area making up roughly 20% of the test, so it is very important for your final result. I would highlight study session 9 as the one that really gets people frustrated. If you can keep your cool and learn this study session then you will be ahead of many candidates. The readings in study session 9 are actually shorter than the ones in study session 8, but the material is more complex, and some people just loose track as the complexity increases. Please do reach out at info@financialexamacademy.com if you see any signs of this happening to you when you get there.

Otherwise my best piece of advice would be to pick a company that you like. I don’t know if you are invested in any companies yourself, if so one of those would be a great candidate, but otherwise just pick a public company that you like. It is an advantage if you have a bit of an understanding about how their business works already. Then pull up their latest annual report and as you work through FRA try and see how the different concepts that you are learning are reflected in their reports. In my experience this makes the entire thing a little bit more tangible. That said don’t spend a lot of hours on this and don’t stress if you cannot find certain items in the annual reports, it is just meant as a more tangible reference to better remember the various concepts that you are learning.

Also, we are clearly not going to get through all of FRA in a week. We will break the topic down into 3 manageable chunks, and this first week will likely feel like a little bit of a “vacation” in terms of reading intensity following the extensive economics readings you have just been through.

The week to come:

Before getting into Financial Reporting & Analysis (FRA) remember to wrap up the last Economics reading.

The main study session that we are tackling this week is rather descriptively called: “Financial Reporting & Analysis: An Introduction”. It is a pretty light read with plenty of examples exhibits and an optional segment in the second reading. We will finish the week with the first reading in study session 8 (Understanding Income Statements). We are going to use our tried and tested study approach to master this material:

  • Please ensure that you write down the LOS on flashcards, and answer the questions on the flip side (marking the book-, reading-, LOS- and page number) as you work your way through each reading. Also create flashcards with any key concepts and formulas that you come across. The combined effort of question practice, LOS statement-, key concept- and formula hunting will ensure that your mind has been primed for seeking out the most important information as you progress through each reading. Practice your flashcards the day after you have completed each reading and make a note of the flashcards that you are struggling to answer in your question log.
  • Please ensure that you attempt the end of chapter questions in the underlying curriculum, once you have finished each reading. As you answer the questions make a note of those that you find particularly difficult in your question log (especially whenever you resort to guessing). Review your answers thoroughly (particularly those that you got wrong) and add these questions to your question log. Your question log should be slowly building, and gradually turning into a powerful revision tool.
  • Lastly, the day after you wrapped up each reading re-attempt the difficult flashcards and end of chapter questions from your question log. Revise and make a note of those that still challenge you. Continue this process for as many days as required until you have mastered all.

Going through this process for each and every reading is bound to help distinguishing yourself from other candidates. Mastering the CFA® level 1 is all about having an effective study approach and allocating the necessary time required for success. I know this is a lot to digest, and despite your best intentions you may be trailing a little bit, or skipping parts to keep up, but remember this process is exactly as difficult for all of your fellow candidates, the only difference is that many of them may be wasting their time using inefficient study techniques.

If you have been following the actions outlined in this program so far you have worked your way through nearly a third of the curriculum already before even starting this week. This may be a good time to pause for a moment, and remind yourself what is your key purpose for taking this test? (in case you have forgotten in the midst of it all). Remember “if you really want to do something, you will find a way, if you don’t you will find an excuse.

Once you are done with this week’s program fill in your week 6 progress report.

In week 7 we are continuing to study Financial Reporting and Analysis.

“CFA Institute does not endorse, promote or warrant the accuracy or quality of the products or services offered by Financial Exam Academy. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute”
FTC Disclosure: “If you decide to make a purchase through my Wiley CFA Exam Review Products link, Wiley will pay me a commission for it. These commissions help to keep the rest of my content free, so thank you! This doesn’t cost you anything additional.”

Submit a Comment

Your email address will not be published. Required fields are marked *