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Subject 5. Financial Statement Analysis Framework PDF Download
The financial statement analysis framework provides steps that can be followed in any financial statement analysis project, including the following:

  • Articulate the purpose and context of the analysis.

    What is the purpose of the analysis? Evaluating an equity or debt investment? Or issuing a credit rating?

    The context needs to be defined clearly too: Who is the intended audience? What is the nature and content of the final report? What is the time frame? What is the budget?

  • Collect input data.

    Gather a company's financial data from financial statements and other sources described in Subject c (other financial information sources). Also gather information on the economy and industry to understand the environment in which the company operates.

  • Process data.

    Compute ratios or growth rates, prepare common-size financial statements, create charts, perform statistical analyses, make adjustments to financial statements, etc.

  • Analyze / interpret the processed data.

    Interpret the output to support a conclusion (e.g., a buy decision).

  • Develop and communicate conclusions and recommendations.

    Communicate the conclusion or recommendation in an appropriate format.

  • Follow up.

    Periodic review is required to determine if the original conclusions and recommendations are still valid.

Learning Outcome Statements

f. describe the steps in the financial statement analysis framework.

CFA® Level I Curriculum, 2020, Volume 3, Reading 19

User Contributed Comments 5

User Comment
apiccion ArCPAD-F
MRSLETS 1.Purpose
6.Follow ups
dhool Gud 1 thanx buddy
leon121 i was thinking like apiccion! But i appreciate the "r" in there. less awkward without the "r"
Dsteth Purpose, collect, process, analyze, conclusion, follow up
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach

Andrea Schildbach

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