Page 79 - FINAL CFA I SLIDES JUNE 2019 DAY 7

Session Unit 7:
27. Financial Analysis Techniques

• Credit Analysis, p164

• Z score,

• interest coverage ratios (using EBIT or IBETDA),
• return on capital, LOS 27.f: Explain the requirements

• debt to assets ratios, for segment reporting and

• cash flow to debt. Etc. calculate and interpret segment
ratios, p.165
tanties

• Both U.S. GAAP and IFRS require companies to report segment data, but the required

disclosure items are only a subset of the required disclosures for the company as a

whole.

• Nonetheless, an analyst can prepare a more detailed analysis and forecast by
examining the performance of business or geographic segments separately.

• Segment profit margins, asset utilization (turnover), and return on assets can be very
useful in gaining a clear picture of a firm’s overall operations. For forecasting, growth

rates of segment revenues and profits can be used to estimate future sales and profits

and to determine the changes in company characteristics over time.