My Road to CFA

In CFA level I exam, financial statement analysis is the most important topic, which accounts for 20% of the total exam. I have no accounting background, as I am a social science student, the whole accounting thing is really new and strange for me. I felt that it is extremely difficult at first.

In CFA level I exam, there are 4 study sessions committed to financial statement analysis. Study session 7 is the introduction to financial statements, analysis of statement of cash flow, and diversity of accounting standards. Study session 9 is inventory accounting and analysis of long-term assets. Study session 10 is not income tax analysis, financing liabilities and off-balance sheet items. Study session 8 is ratio analysis and EPS.

These four study sessions are really highly related. It might seems to be extremely difficult at first to analyze the statement of cash flow before you know at least a little bit on depreciation and disposal of long-term asset (like PP&E, etc), which is discussed in study session 10. I can say that my initial difficulties in doing the study session 8 was that I really don't know about depreciation and disposal!

As a result, it is very difficult for anybody who has no accounting background to review these study sessions, because many times if you have not studied study sessions 9 and 10, you would not know what's going on in session 7. So from my experience, my recommendation is that if you encounter difficulties at some points, the better way would be to skip that and go ahead, and return that those points later. In this way, you may get a better insights on those points.