- CFA Exams
- Level I 2020
- Study Session 13. Equity Investments (2)
- Reading 40. Introduction to Industry and Company Analysis
- Subject 6. Company Analysis
Why should I choose AnalystNotes?
AnalystNotes specializes in helping candidates pass. Period.
Subject 6. Company Analysis PDF Download
After an analyst has gained an understanding of a company's external environment, he/she can start company analysis. This includes analysis of the company's financial position, products and/or services, and its competitive strategy. The analyst should try to determine if the strategy is primarily defensive or offensive and how the company intends to implement the strategy.
A firm can pursue one of the two basic types of competitive strategies: low cost or differentiation. To achieve abnormal profitability, a company should either incur low costs in its production process, or receive premium-to-average market price based on its products' differences preferential to customers. High profits will be possible only if the company with a cost advantage can sell its products at high-enough prices and if the company with a differentiation advantage can keep the costs of superior products sufficiently low.
A checklist for company analysis includes a through investigation of:
- Corporate profile;
- Industry characteristics;
- Demand for products/services;
- Supply of products/services;
- Pricing; and
- Financial ratio.
Learning Outcome Statementsk. describe the elements that should be covered in a thorough company analysis.
CFA® Level I Curriculum, 2020, Volume 5, Reading 40
User Contributed Comments 1
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
My Own Flashcard
No flashcard found. Add a private flashcard for the subject.