CFA Notes - Financial Reporting & Analysis

Note

（I）Balance Sheet

i. Definition

The balance sheet（存量表） presents a company's current financial position by disclosing the resources the company controls（assets） and its obligation to lenders（liabilities） at a specific point in the time.

ii. Current Asset

Assets held primarily for the purpose of trading or expected to be sold, used up, or otherwise realized in cash within one year or one operating cycle of the business are classified as current assets, such as:

1. Cash and cash equivalent；
2. Inventory；
3. Accounting receivable

iii. Non-Current Asset

Assets not expected to be sold or used up within one year or one operating cycle of the business are classified as non-current assets（long-term assets）, such as:

1. Tangible Assets；
2. Intangible Assets；
3. Goodwill

Property, plant, and equipment（PP&E） are tangible assets that are used in company operations and expected to be used (provided economic benefit) over more than one fiscal period.

iv. Current Liability

Current liabilities are those liabilities that are expected to be settled in the entity's normal operating cycle or due to be settled within 12 months after the balance sheet date.

v. Non-Current Liability

All liabilities that are not classified as current are considered to be non-current liabilities or lont-term liabilities.

1. Long-term debt 长期借款；
2. Deferred tax liabilities 延迟税负债；
3. Lease payable 租赁

vi. Shareholders' Equity

Equity represents the owner's residual interest in the company's assets after deducting its liabilities, commonly known as shareholders' equity or owners' equity.

1. Contributed capital 投入资本
2. Preferred stock 优先股；
3. Common stock 普通股；
4. Additional paid-in capital 股本溢价；
5. Treasury stokcs = repurchase 公司回购；
6. Retainal earings 留存收益；
7. Accumulated other comprehensive income（OCI） 累计其他综合收益；
8. Minority interest 少数股东权益

vii. Accouting Equation

The equation：Asset = Liability + Equity is sometims summarized as follows. The left side of the equation reflects the resources controlled by the company and the right side reflects how those resources were financed.

（II）Financial Assets

i. Definition

Financial asset is a non-physical asset whose value is derived from a contractual claim, such as

1. Bank deposits；
2. Bonds；
3. Stocks

Financial assets are usually more liquid than other tangible assets, such as equipment or real estate.

ii. Held-to-Maturity Investments

（a）Definition

Financial asset with fixed or with determinable payments and fixd maturity which the company has to be willing and able to hold till maturity are classified as "held-to-maturity" investments.

（b）Liquidity Ratio

iii. Trading Securities

Trading security refers to category of financial assets that is acquired primarily for the purpose of sellilng in the near term. These assets are likly to be held only for a short period of time（less than three months）.

iv. Available-for-sale Securities

Some financial assets are not classified as trading nor held-to-maturity investments, even though they are available to be sold. Such financial assets can be classified as available-for-sale securites.

v. Classification of Securities

a. Debt Securities

1. Bonds；
2. Debenture

b. Equity Securites

1. Common stock；
2. Preferred stock

c. Derivatives

1. Forwards；
2. Futures；
3. Options；
4. Swaps

（III）Income Statement

i. Income Statement

（a）Definition

The income statement reflects a company's revenues and expenses during a particular period, it indicates how the revenues are transformed into net income.

（b）Charistic

1. ;
2.

ii. Revenue

The amounts charged for the sale of goods and delivery of services. On the top line of income statment, companies typically report revenue.

Revenue = Sales = Income

iii. Expense

Expenses reflect the outflow of economic benefit that result in decrease of equity. There are various of constitutions of expenses.

1. Cost of good sold (COGS) 销货成本；
2. Selling, general, and administrative expense (SG&A) 销售管理一般费用；
3. Interest expense 利息费用；
4. Tax expense 税费

iv. Net Income

v. Gains and Losses

vi. Accounting Equation

（IV）Intangible Asset

i. Definition

Intangible assets are identifiable non-monetary assets without physical substance.

ii. Patent 专利

A patent is a set of exclusive rights granted by a sovereign state or intergovernmental organization to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention. An invention is a solution to a specific technological problem and is a product or a process.

iii. Copyright 版权

Copyright is a legal right created by the law of country that grants the creator of an original work exclusive rights for its use and distribution.

iv. Trademark 商标

A trademark, trade mark, or trade-mark is recognizable sign, design or expression which identifies products or services of a particular source from those of others.

v. Goodwill 商誉

Goodwill is an intangible asset that represents the excess of the purchase price of an acquired company over the value of the net assets acquired.

vi. Differences between Tangible Assets and Intangible Assets