Hello Everybody, I am completely new to this subject and finding it little hard to learn. Do you know an online resource to learn from? Thanks k
kochunni I would say read the CFAI text book. That is the best source. and try the method on a couple of practice problems. The practice problems might be asking you to calculate only some part of the entire puzzle. Nonetheless, try to solve with the presented information using both the direct and the indirect methods. Only practice with both methods, conversion, and an understanding of similarities and differences would prepare you sufficiently for being able to tackle problems on the Cash Flow statement. CP
Since the quetions in L1 is multiple choice, what kind of questions they can ask from the direct and indirect methods involving calculation? The reason being, it could take more than 90 seconds if somebody is going to ask to calculate a CFO, CFI or CFF.
yes some questions could take more than 90 secs, but there are many 10-15 sec takeaway definitional type of questions as well. I would say at this early stage of your studying, do not concentrate on the timing part of the test. Get the concepts right, get the ideas flowing. Cashflows does not come directly only to calculate CFO, CFI, CFF. There are intermediate parts like Given Retained earnings balances, and Dividend paid --> get to Net income. (this was there in Dec exam). Given the PPE Balances, and the gain / loss on Sale of equipment, and the depreciation expense – figure out the Selling Price for an equipment. (One such q was there in the Dec exam). When you go to Alt Inv. you have places where the Cash Flow needs to be calculated to evaluate Real Estate. After Tax Cash flows play a critical part in Corp Fin for evaluation of projects. There may or may not be a question asking you to calc the cash flow, per se, but knowing the concepts helps a lot. The two times (*2 exams) in June and December that I took, I found I had about 45 mins to kill at the end of each exam. Regards CP
Thanks CP. That was very helpful
Q-bank has a nice selection of cash flow questions. Those questions really helped me.