Lecture notes S2 L 3 - 1 Analyzing Investing Activities...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
1 1 Analyzing Investing Activities Main References: Subramanyam and Wild, Chapter 4 Palepu and Healy, chapter 2, 3 &4 CFA Program Curriculum, Levels I and II. 2 Key Concepts and objectives Assets are defined as resources with probable future benefits. Distortions may generally arise from ambiguities about whether: The firm owns/controls the economic resource Future economic benefits can be measured with reasonable certainty Fair values are higher or lower than book values
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 3 Key Concepts and objectives The key objectives in analysing investing activities are as follows: Analyse, adjust and interpret various kinds of assets and evaluate their relevance in analysis Understand the importance of the following investing activities in analysing financial statements: Accounts receivables Inventory valuation methods Plant assets and natural resources Intangible assets And be able to adjust any distortions in assets created by the above items in financial statement analysis 4 Key Concepts and objectives Analyzing the investing aspect of the balance sheet for possible distortions allows the analyst to better understand the economic substance of a firm’s investing activities
Image of page 2