Page 53 - FINAL CFA SLIDES DECEMBER 2018 DAY 13

LOS 48.j: Describe macroeconomic,
technological, demographic, governmental, Session Unit 14:
48. Introduction to Industry and company analysis
and social influences on industry growth,
profitability, and risk., p.274

1. External environment, then:

2. Company analysis
2.1 Financial condition, products and services, and

2.3 Competitive strategy: Defensive or offensive; cost leadership (low-cost)

strategy or a product or service differentiation strategy.

tanties
In summary, firm overview, includes information on operations, governance, and strengths and
weaknesses.
• Industry characteristics.

• Product demand.
• Product costs.

• Pricing environment.
• Financial ratios, with comparisons to other firms and over time.
• Projected financial statements and firm valuation.

A firm’s return on equity (ROE) should be part of the financial analysis. The ROE

is a function of profitability, total asset turnover, and financial leverage (debt).