- CFA Exams
- 2024 Level II
- Topic 3. Financial Statement Analysis
- Learning Module 22. Inventories
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Learning Outcome Statements PDF Download
| 1. Cost of Inventories contrast costs included in inventories and costs recognised as expenses in the period in which they are incurred; | |
| 2. Inventory Valuation Methods describe different inventory valuation methods (cost formulas); calculate and compare cost of sales, gross profit, and ending inventory using different inventory valuation methods and using perpetual and periodic inventory systems; calculate and explain how inflation and deflation of inventory costs affect the financial statements and ratios of companies that use different inventory valuation methods; | |
| 3. Periodic versus Perpetual Inventory System describe different inventory valuation methods (cost formulas); calculate and compare cost of sales, gross profit, and ending inventory using different inventory valuation methods and using perpetual and periodic inventory systems; calculate and explain how inflation and deflation of inventory costs affect the financial statements and ratios of companies that use different inventory valuation methods; | |
| 4. The LIFO Method explain LIFO reserve and LIFO liquidation and their effects on financial statements and ratios; demonstrate the conversion of a company's reported financial statements from LIFO to FIFO for purposes of comparison; | |
| 5. Measurement of Inventory Value describe the measurement of inventory at the lower of cost and net realisable value; describe implications of valuing inventory at net realisable value for financial statements and ratios; | |
| 6. Financial Analysis of Inventories describe the financial statement presentation of and disclosures relating to inventories; explain issues that analysts should consider when examining a company's inventory disclosures and other sources of information; calculate and compare ratios of companies, including companies that use different inventory methods; analyze and compare the financial statements of companies, including companies that use different inventory methods. |
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