CFA Level I · CFA Level I Exam · Introduction to Financial Statement Analysis
Which source of information is most likely to give an analyst management's discussion of the company's results, liquidity and capital resources, along with known trends and uncertainties?
Management commentary, also called management's discussion and analysis, most likely provides management's view of results, liquidity, capital resources, and known trends and uncertainties. The auditor's report only gives an opinion on the statements, and the notes mainly detail policies and line items.
- AManagement commentary (management's discussion and analysis).Correct
- BThe notes to the financial statements.
- CThe auditor's report.
Explanation
Management commentary, or MD&A, is where management discusses performance, liquidity, capital resources and trends. It is generally not audited in the same way as the statements. The auditor's report gives an opinion, and the notes provide accounting policies and detail.
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