Section 1: 40–50%B1
Financial Statement Analysis and Ratios
Exam insight
BAR leans hard on computing and interpreting ratios, you'll be handed two financial statements and asked for a clean current ratio, DSO, or DuPont-decomposed ROE. Knowing the exact numerator and denominator of each ratio is the difference between a fast point and a guess.
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What AICPA wants you to know
- 1Compute and interpret the core liquidity ratios (current, quick, cash)
- 2Calculate activity ratios and convert turnovers into days (DSO, days inventory, days payable, operating and cash cycles)
- 3Apply solvency and leverage ratios (debt-to-equity, debt ratio, times-interest-earned)
- 4Compute profitability ratios (gross/operating/net margin, ROA, ROE)
- 5Decompose ROE using the three-step DuPont model
- 6Perform horizontal, vertical, and common-size analysis