Hi guys. I am attempting to apply the knowledge from level 2 CFA Equity by doing a complete analysis of a few companies. I have not done this before and didn’t take long and I am stuck under FSA. I have with me financial reports for two public companies and each presents me with different problems.
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Apple - the Income statement omits depreciation/amortization altogether. What is the recommended treatment for this? Should I attempt to include it in the Income Statement?
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Food ingredient manufacturing - the flow of income statement is as follow:
Revenue
Other revenue
Change of inventories
Raw mat
Finished goods (purchased)
Employee Benefits
Depreciation PP&E
Other operating expense
Profit before tax
There is no Gross Profit sub total before other expense, it then went to EBIT, Tax and Net Profit.
i) I am considering to rearrange all the items to attempt to get a Gross Profit.
ii) These will be before Gross Profit (change in inventories, raw mat, finished goods)
iii) These will be after Gross Profit (Employee benefits expense, Depreciation PP&E, other operating expense)
iv) Then add back Other Revenue (consisting of rental and interest income, gains of PP&E and derivatives)
Anyone who is learning analysis and financial modeling can get in touch so that we can share our learning.