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CFA Level I · CFA Level I Exam · Introduction to Financial Statement Analysis

Which of the following sources of information is most likely to be used by an analyst to supplement the financial statements when assessing a company's future prospects?

Analysts most likely supplement the financial statements with industry data, competitor reports and economic forecasts. These external sources help judge future prospects in context. Internal journal entries are usually unavailable to outsiders, and one prior-year balance sheet is far too narrow a source.

  1. AIndustry data, competitor reports and economic forecastsCorrect
  2. BOnly the prior-year balance sheet of the same company
  3. CThe company's chart of accounts and internal journal entries

Explanation

Analysts supplement financial statements with external information such as industry data, competitor information and economic forecasts to assess prospects. A single prior-year balance sheet is too limited, and internal journals are generally unavailable to outside analysts.

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