AFA case studies
AFA · Put your knowledge to work in context.
The Accredited Financial Analyst (AFA) is an independent professional designation for practitioners who analyse financial statements, value securities, and make or advise on investment decisions. Candidates typically come from corporate finance, equity research, private client advisory, banking, and accounting backgrounds, and many sit the exam while working full time. The syllabus is broad rather than narrowly technical: ethics and professional standards, financial reporting and analysis, corporate finance, equity valuation, fixed income, derivatives and alternative investments, portfolio management and wealth planning, and quantitative methods with economics. The exam is multiple choice and tests applied judgement as much as recall, so memorising formulas alone is rarely enough. The AFA case studies are 5 cases and about 3,665 words.
1Analyst Independence and Fee Disclosure
You are a senior analyst at a boutique research firm. Your firm has been engaged by a mid-cap technology company to produce an initiation-of-coverage report.
711 words, about 4 min2Revenue Recognition and Channel Stuffing
You are analyzing a consumer electronics company that sells through distributors. Revenue grew 25% in the most recent quarter, while accounts receivable increased 40% and days sales outstanding (DSO) rose from 45 to 62 days.
756 words, about 4 min3Capital Budgeting with Real Options and Risk
A manufacturing company is considering a 50 million investment in a new production line. The project has a expected life of five years, after which it can be sold for 10 million.
772 words, about 4 min4Equity Valuation with Changing Growth and Multiples
You are valuing a mature industrial company that pays a dividend of 2.00 per share. The company has a return on equity (ROE) of 12% and a retention ratio of 40%.
704 words, about 4 min5Fixed Income Duration and Credit Spread Analysis
A portfolio manager holds a corporate bond with a face value of 10 million, a coupon rate of 5% paid annually, and 7 years to maturity. The bond is currently priced at 9.5 million, yielding 6%.
722 words, about 4 min