Page 52 - FINAL CFA I SLIDES JUNE 2019 DAY 8
P. 52
Analyzing the Effective Tax Rate
Session Unit 8:
Reconciliation, p.260 30. Income Taxes
Why does effective tax rate (ETT) differ from statutory tax rates (STR) ? Why should a CFA bother?
Example: Analyzing the tax rate reconciliation, p.261. Novelty Distribution Company (NDC) does
business in the US and abroad with its reconciliation between effective and statutory tax rates for 3
years as below (footnotes in FS). Analyze the trend in ETR over the 3 years shown.
tanties
Volatility:
Can CFA use this to predict tax rats, earnings or
cash flows easily? Not much…..
