Cash flow based accruals

Hi all if you have cash flow based acruals ratio of 2007 - 10.96 2008 - 5.86 2009 - 9.92 clearly i see that these fluctuations are aggressive and could indicate a quality issue, albeit the CFAI suggests that these are modest fluctuations, what do you think? Best,


Sorry missread your question. I actually got this one wrong to looking back at the question would like to know why this would be considered not agressive. It would seem like such a wild swing in one year would be agressive.

Piggy backing on your question. Are the accruals ratios mentioned in the actual curriculam books this year? I have seen them floating around on various practice problems but I did not find them in the official material. Just wondering if they are part of this year’s curriculam.

They are part of the curriculam, with cash flow based accrual ratio = ( NI - CFO - CFI ) / Average net operating assets

and balance sheet based accrual ratio = Change in net operating assets / Average net operating assets.

Can you reference where to find them in the CFAI book?

Sure, LOS e, Reading 22

thank you!