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AFM 182 — Financial Reporting & Managerial Decision Making 2

Public-company reporting, analysis and decisions — 83 lessons across both halves of the paper

The whole of AFM 182 as the paper examines it. The midterm half: IFRS against ASPE, LCNRV write-downs and inventory errors, PP&E disposal and impairment under both frameworks, share issuance, dividends and market versus book value, corporate governance under the CBCA and NP 58-201, ESG reporting and provisions. The final half: horizontal and vertical analysis, margins, ROA and ROE, covenants, the cash flow statement read four ways, liquidity and the cash conversion cycle, budgeted statements, KPIs and the five-perspective balanced scorecard, relevant costs for keep-or-drop and relocation decisions, and NPV with WACC. Journal entries are built from a chart of accounts that includes the traps; every ratio, cash-flow line and NPV is graded on the number; the questions the paper wants in prose are written and graded against a marking scheme.

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How AFM 182 Is Examined, and the Two Canadian Frameworks

44 cards
  1. Two exams, two registers, and where the marks are 8 min ◈ 5
  2. What changes when a company goes public 9 min ◈ 6
  3. Adverse selection, moral hazard, and the cost of rules 9 min ◈ 6
  4. Adopted, not written: the Handbook’s two parts 8 min ◈ 6
  5. Two fundamental, four enhancing, one constraint 10 min ◈ 8
  6. What gets on the statement, at what number, under what assumptions 9 min ◈ 6
  7. The one table the midterm keeps coming back to 10 min ◈ 7

Inventory Beyond Cost: LCNRV and Inventory Errors

44 cards
  1. FIFO, weighted average, and why you cannot switch on a whim 7 min ◈ 5
  2. Cost is a ceiling, not a floor 9 min ◈ 8
  3. Why grouping shrinks the write-down 9 min ◈ 7
  4. Up to cost, never above it — under both frameworks 9 min ◈ 9
  5. Opening + purchases − ending = COGS, and the sign falls out 10 min ◈ 7
  6. Before close it is COGS; after close it is retained earnings 9 min ◈ 8

PP&E: Disposal and Impairment

51 cards
  1. The first entry is always depreciation 9 min ◈ 8
  2. Proceeds minus carrying amount, and the sign of the plug 10 min ◈ 8
  3. The higher of two numbers, and why "higher" 10 min ◈ 9
  4. The loss, and what next year's depreciation becomes 9 min ◈ 9
  5. Only up to where you would have been 10 min ◈ 7
  6. Same asset, impaired under one framework and not the other 11 min ◈ 10

Public Capital Markets, Shares and Dividends

54 cards
  1. New readers, and why a company goes to the market 9 min ◈ 8
  2. Two components, one total 7 min ◈ 5
  3. Three counts, no-par shares, and net of costs 10 min ◈ 9
  4. Retained earnings is not cash 10 min ◈ 10
  5. Arrears, fair value, and the entry that does not exist 10 min ◈ 9
  6. Why the market pays 2.5 times book 9 min ◈ 7
  7. Reacquired shares, and the two frameworks’ equity statements 8 min ◈ 6

Corporate Governance

40 cards
  1. Principals, agents, and the system that keeps them honest 8 min ◈ 5
  2. Noses in, fingers out 9 min ◈ 7
  3. Outside is not independent 10 min ◈ 7
  4. Who owns the auditor 9 min ◈ 9
  5. What a start-up needs, and what an IPO forces 9 min ◈ 5
  6. The scenario judgement the midterm asks 10 min ◈ 7

ESG, Sustainability Reporting, Provisions and Contingencies

67 cards
  1. Voluntary, beyond the law, and layered 8 min ◈ 7
  2. People, planet, profit; E, S, G 9 min ◈ 9
  3. GRI, SASB, ISSB, and the claim that does not hold up 10 min ◈ 9
  4. Uncertainty is the discriminator 10 min ◈ 8
  5. Estimate at sale, draw down as claims come 10 min ◈ 10
  6. Capitalise the PV, accrete the liability, depreciate the asset 10 min ◈ 9
  7. Probable vs likely, expected value vs lowest in range 10 min ◈ 9
  8. Where a green promise shows up in the statements 9 min ◈ 6

Midterm Rehearsal: Chapters 1–5 Integrated

37 cards
  1. Every contrast in the midterm half, one table 9 min ◈ 10
  2. Eight entries, new company, no hints 11 min ◈ 13
  3. Two integrated prompts in the paper’s register 10 min ◈ 6
  4. Timed, mixed, cold 10 min ◈ 8

Income-Statement Analysis and Planning

49 cards
  1. Where revenue and cost come from 8 min ◈ 6
  2. Volume times price, and what the fixed costs do 9 min ◈ 7
  3. Change on a base, and share of a base 10 min ◈ 6
  4. Gross, EBIT, net — and where a change came from 10 min ◈ 8
  5. A ratio without a benchmark is a number 8 min ◈ 5
  6. Why budget, who sets it, and what it does to people 10 min ◈ 10
  7. Drivers in, statement out, then compare at the same volume 11 min ◈ 7

Balance-Sheet Analysis and Planning

39 cards
  1. Income over the resources that earned it 8 min ◈ 5
  2. Three ratios, one pack 10 min ◈ 8
  3. Margin × turnover × leverage, and why ROE beats ROA 10 min ◈ 7
  4. Tested on reported numbers, so reporting choices matter 9 min ◈ 6
  5. How many days cash is tied up at each stop 10 min ◈ 7
  6. Every line from a driver; the difference is financing 12 min ◈ 6

Cash-Flow Analysis and Planning

49 cards
  1. Profit is an opinion, cash is a fact 8 min ◈ 6
  2. Net income, plus what was not cash, plus what working capital did 11 min ◈ 6
  3. Choose once, stay consistent; ASPE does not let you choose 8 min ◈ 7
  4. Is operating cash real, where did investing go, how was it financed, and why did cash move 10 min ◈ 9
  5. Can it pay, and is “too liquid” a thing 9 min ◈ 7
  6. Days inventory plus days receivable minus days payable 10 min ◈ 7
  7. Receipts by pattern, payments by pattern, then borrow or invest 12 min ◈ 7

Performance Management: Strategy, KPIs, the Scorecard, Responsibility Centres

51 cards
  1. What gets measured gets managed — so measure the strategy 8 min ◈ 7
  2. A number that predicts, and a number that confirms 9 min ◈ 8
  3. Financial, customer, internal process, learning and growth — and environmental 10 min ◈ 7
  4. On-time delivery is customer OR process — say which and why 10 min ◈ 6
  5. Who controls what, and what they are judged on 9 min ◈ 8
  6. Judge the manager on what she controls; then watch what ROI makes her refuse 11 min ◈ 7
  7. The wrong measure for the right manager 9 min ◈ 8

Relevant Costs and Benefits: Keep or Drop, Location, Relocation

33 cards
  1. Sunk is gone, allocated is not saved, forgone is a cost 10 min ◈ 10
  2. A loss on the full-cost statement is not a reason to drop it 11 min ◈ 6
  3. Opportunity cost flips the answer; the caveats decide it 10 min ◈ 6
  4. One-time versus annual, over the lease term 10 min ◈ 5
  5. Break the lease, move, lose a month, then save — and why this answer is provisional 10 min ◈ 6

Investing Decisions: Time Value, the Discount Rate, WACC and NPV

50 cards
  1. Big, long, hard to reverse — and cash, not income 9 min ◈ 7
  2. A dollar today can be invested — that is the whole reason 10 min ◈ 7
  3. The annuity factor is a sum; uneven flows are a sum you do by hand 10 min ◈ 5
  4. The rate is the return the money could earn elsewhere at the same risk 11 min ◈ 9
  5. PV of what comes in, minus what goes out today 11 min ◈ 8
  6. The same move, discounted — and the memo that says why 11 min ◈ 5
  7. Chapters 6–11 cold, in the paper’s mix 12 min ◈ 9
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