The experience of studying CFA in LBS

We start the journey of LBS EMBA 27 in Jan 2022. Mainly focus on 4 session (CFA, ABP,MC,DA). I enjoy this journey very much. As for the CFA session, I would like to say it is really very good and professional session. I had very high expectations from the beginning. Professor . Owolabi provides very clear guidance to us. I‘d like to have this summary of the company’s fianancial statement.

The company’s financial statements can be divided into the following four large tables.

balance sheet
Income Statement
cash flow statement
Statement of Changes in Owner’s Equity
The above four tables contain rich content. In fact, each table can be introduced in an article by itself.

I get a summary of the financial statement below.

Balance Sheet
The balance sheet contains the current company’s assets, liabilities, and owner’s equity. To put it bluntly, it is how much the company currently has, the debt situation and the rights and interests of shareholders.

To read a balance sheet, understand a simple equation:
Company’s total assets = Company’s total liabilities + Company’s total owner’s equity (net assets)

This formula is easy to understand. The company’s total assets will include the company’s net assets and borrowed money.

The purpose of reading the balance sheet is to find out the structure of the company’s assets, what assets it has, how much debt the company currently has, what form of debt it has, and how much it has remaining net assets.

When we look at the balance sheet, we should pay attention to the specific items of funds, such as whether the asset is cash or real estate, whether the liability is a short-term liability or a long-term liability, and whether there is cash for debt repayment, etc.

Income Statement
The income statement contains some information about the company’s operating income, operating profit, and total profit. To put it bluntly, this table shows the company’s ability to make money.

The income statement records the operating results of a business during this period, how many products are sold, how much revenue is received, what is the cost, what is the final benefit, and so on.

The core of the income statement is how each link in the income statement is changed and transmitted.

For example, indicators such as operating income, operating profit, comprehensive profit, net profit, etc., if the meaning of these indicators is clear and the relationship between them is understood, it can be said to understand the income statement.

Cash Flow Statement
The cash flow statement shows how the company’s cash flows.

First, we need to understand the difference between a cash flow statement and an income statement.

The cash flow statement shows the real changes in cash, and the income statement is a change in a buying and selling relationship, but in fact, a buying and selling relationship is established, but no cash flow is actually generated, because of credit or some other reasons.

Therefore, the cash flow statement is also very important, which allows us to judge whether the company has a large amount of credit, so as to determine whether the company’s products are competitive in the market — the products of companies with high competitiveness should be It is the seller who is rushing to purchase the goods without the need for credit.

Statement of Changes in Owner’s Equity
The statement of changes in owner’s equity shows the changes in owner’s equity over a certain period of time. It can be said that the statement of changes in owner’s equity is a bridge between the balance sheet and the income statement. On the one hand, it shows the reasons and specific contents of the changes in owner’s equity in the balance sheet, and on the other hand, it is a supplement to the income statement. Items and content bypassing the income statement are fully disclosed.

We can understand the preservation and appreciation of the company’s assets and interests by reading the statement of changes in owner’s equity.

The above four tables do not exist independently but are interrelated, and we need to look at them comprehensively.

EMBA27-Jason YANG