Today I went through Reading 32 which was dedicated to the income statement. Although it went through revenue and expense recognition thoroughly, the part of the reading which stuck out was on calculating the earnings per share (EPS).
There are 2 different ways of calculating this; the basic EPS formula is used when the company has a simple capital structure (when it does not have securities which can be potentially converted into ordinary shares). Diluted EPS is calculated when the company has a complex capital structure. Depending on the capital makeup of the company, the diluted EPS formula is different, however they are all similar in a way because it all comes down to total potential income divided by potential number of shares. Now that I think about it, it's not a very hard concept but it seemed to take a while to sink in and "get it."
Does anyone else have these kinds of moments? I think they are bound to come up when you are studying an immense amount of material covering a variety of topics because it's very hard to be an expert in all areas. The CFA curriculum is very well written and usually have examples on all the concepts you need to learn so if you get to a stage where you simply can't comprehend a topic, take a break from studying and clear your mind. Drink some water, have something to eat get some exercise, and come back to it later. Your brain will still be processing the information subconsciously (although I'm no psychologist) and when you come back to the topic, your brain might finally "click," Working through some questions and see how it's worked out can sometimes help as well. Of course, you could always ask someone for help, but not many people take the CFA exam so you might not know anyone around your area who you can talk to. There are always online forums (like analystforum) where you can ask questions too.
Hopefully after a good sleep tonight I can get on to the balance sheet reading tomorrow.
97 days until the level 1 exam.
