Download Wiley CFA Level I Formula Sheets PDF

TitleWiley CFA Level I Formula Sheets
TagsCfa Level 1
File Size6.3 MB
Total Pages99
Table of Contents
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Page 2

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When converting from LIFO to FIFO assuming rising prices:

Equity (retained earnings) increase by:

LIFO Reserve × (1 − Tax rate)

LIFO Reserve × (Tax rate)

LIFO Reserve

Liabilities (deferred taxes) increase by:

Current assets (inventory) increase by:

Page 50

long-lived assets

© Wiley 2017 all Rights Reserved. any unauthorized copying or distribution will constitute an infringement of copyright.48

Long-Lived Assets

Financial Statement Effects of Capitalizing versus Expensing

Effect on Financial Statements
Initially when the cost is

• Noncurrent assets increase.
• Cash flow from investing activities decreases.

In future periods when the asset is
depreciated or amortized

• Noncurrent assets decrease.
• Net income decreases.
• Retained earnings decrease.
• Equity decreases.

When the cost is expensed • Net income decreases by the entire after‐tax
amount of the cost.

• No related asset is recorded on the balance
sheet and therefore, no depreciation or
amortization expense is charged in future

• Operating cash flow decreases.
• Expensed costs have no financial statement

impact in future years.

  Capitalizing Expensing

Net income (first year) Higher Lower

Net income (future years) Lower Higher

Total assets Higher Lower

Shareholders’ equity Higher Lower

Cash flow from operations Higher Lower

Cash flow from investing Lower Higher

Income variability Lower Higher

Debt-to-equity Lower Higher

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Page 99

IntroductIon to AlternAtIve Investments

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Introduction to Alternative Investments

Pricing of Commodity Futures Contracts

Futures price = Spot price (1 + r) + Storage costs � Convenience yield

r = Short�term risk�free rate

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