CFA level 2 question, help...
AM
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(Monkey, 44
Points)
on 5/27/12 at 3:28pm
(Not sure where to post this question....)
I hope you guys are having a better Memorial day weekend than I am. I am going to take the CFA test next weekend and have a few questions not sure whom to ask...
If there is somebody nice enough to answer a few accounting related questions, I will really appreciate it.
-1 (background info in the picture), question is whether Thomlinson's comment is correct. --this is a question in 2012 mock exam.
Thanks so much in advance.






there is no way to enlarge
there is no way to enlarge that fyi
Seems correct. I'm not sure
Seems correct. I'm not sure though.
Reasoning: Since the Net profit is very high, it could be a recognition of a one time gain(or liquidation). The -ve BS accrual ratio suggests a decrease in the operating assets big time(I'm assuming the buggers sold of inventories without replenishing, hence the accrual CF ratio is highly positive too).
PS - Hate the accounting portion of the CFA.
operating cash flow is cash
operating cash flow is cash accounting number, earnings and operating income are accrual accounting based.
I don't recognize those ratios but I assume with those numbers you can calculation CF, EBIT, and NI
This just made me realize how
This just made me realize how little i remember from Level 2 after only a year.
Sorry I can't help, but good luck on Saturday.
"Social cohesion and puritanical morality place roughly on my list of concerns between whether I'll pick up jock itch at the gym this week (not likely, since I don't go the gym) and whether it'll rain in Christchurch, New Zealand next Tuesday."
-Eddie
trailmix8: there is no way to
there is no way to enlarge that fyi
Yea there is.
And it's incorrect.
duffmt6-- I barely remember
duffmt6-- I barely remember anything I read a week ago.
The answer is that his comment is not correct. The company experienced more cash earnings than accounting earnings. I am quite slow with accounting, and not sure what's going on here.
This question doesn't seem to
This question doesn't seem to make much sense.
To me, "the comparison you have made between operating cash flow and operating earnings is biased upward when comparing to accrual based operating income."
The comparison is the operating cash/operating earnings which is 0.4 This means that 40% of the operating earnings are actually converted to cash. I don't understand where the "biased upward" comes from though. The question refers to Chapter 26 which covers accruals. Accrual based earnings are not persistent and have to eventually revert. Could this mean biased upward?
I'm taking the practice test tomorrow morning. We'll see if I am right haha
I am so confused by this.
I am so confused by this.
Oreos, can you help us understand better.....seems like you got the right answer....
Gray Fox- i think accounting questions in mock are much harder than those in the book.
This question was bullshit.
This question was bullshit. I'm not sure if it was in the thumbnail, but the BS accrual ratio for 2010 was negative indicating that cash earnings were greater than accounting earnings.
Also, the questions before this was bullshit. The revenue recognition practices were fine, but if they changed the useful life for depreciation assumptions from 10 years to 8 years that means depreciation was understated in previous years. The classifying 4.5mm of voluntary early retirement expenses as non-recurring seems much less significant.
Frustration.
I dont think you should
I dont think you should classify retirement expense as non-recurring because its normal operating expenses. But I agree, the accounting part is overly tricky, just ridiculous.