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May 6, 2026
It’s crucial to understand a business's financing choices and why they make certain decisions as a financial analyst. The Corporate Finance topic covers a wide range of information, including specific terminology and calculations. It is also viewed as one of the more approachable topics but it’s still important to gain a strong foundational knowledge during your CFA® Level I exam prep.
It is easy to focus on the calculations in Corporate Finance, but as demonstrated in the reading summaries, these only make up a small proportion of the syllabus. You should not expect the majority of Corporate Finance questions to include calculations. Instead of trying to memorize each calculation:
Focus on the interpretation of the numbers rather than the calculations
Practice as many questions as you can using CFA Level I Qbanks
Throughout your prep stay organized to keep track of your progress
Learning Outcome Statements while studying for a CFA exam refer to specific skills and concepts you should possess within an exam topic whereas exam topics describe the broader body of knowledge you should have. For example, the Corporate Finance exam topic at Level I has lots of LOSs that you’ll need to learn.
An example of a CFA LOS for Corporate Finance is “describe the principal-agent relationship and conflicts that may arise between stakeholder groups.”
As an analyst, it is important to be able to understand aspects such as financing choices from a business’s perspective, understanding the options available to them, and why they may make certain decisions.
Corporate Finance covers a wide range of day-to-day concepts for business such as:
Business models
Types of finance available
The differences between fixed and variable costs
The Corporate Finance topic represents 6%-9% of the Level I exam, which is approximately 10-16 questions. It is tested in the afternoon session, within the Portfolio Management and Analysis Functional Area, alongside Portfolio Construction.
The Corporate Finance topic at Level I tends to be viewed by most candidates as one of the more approachable topics. It covers a wide range of information, some terminology, and some computational.
You will of course form your own opinion but anecdotally we find many candidates feel more comfortable in this area the first time working through the content than some others.
Corporate Finance should be studied after Quantitative Methods to ensure you are comfortable with the CF and TVM calculator functions, which will be important in one of the readings here.
Aside from that, it would be sensible to study this before Equities and Fixed Income as it introduces the cost of capital and different types of funding available.
Below are overviews of each Level I Corporate Finance readings and what you are expected to learn.
This reading ensures you are comfortable with the different types of business structure (e.g. sole proprietorship, partnerships, and corporations) and the differences between public and private companies.
Lenders and owners have different financial claims over a company’s net assets, which means they focus on different aspects of a company’s performance. Various groups inside and outside a company also have differing interests in its operations.
This reading considers a company’s different stakeholders and why conflicts may arise between them. A definition of corporate governance develops into a discussion of how this can be used to manage stakeholder conflicts as well as the general benefits and risks of effective or poor corporate governance.
What is working capital, how is it financed and what relation does it have to liquidity? These are all questions that are answered in this reading, as well as revisiting (from FSA) measures that can be used to compare the liquidity position of two companies, such as the current ratio and receivables turnover.
This reading looks at how a firm’s management allocates the capital available to various activities most efficiently. After introducing the capital allocation process, this covers the first calculations of Corporate Finance:
NPV (Net Present Values)
IRR (Internal Rate of Return)
There is a consideration of pitfalls within capital allocation as well as examples of real options.
This reading introduces a company’s Weighted Average Cost of Capital (WACC) and goes into detail on its target capital structure, including how it might change, theories regarding the optimal capital structure, and how competing stakeholder interests impact capital structure decisions.
A business model offers some detail about how a company proposes to make money including identifying potential customers and explaining how the firm will sell its product amongst other important points. This reading gives an overview of business models, as well as the key business and financial risks a company may face.
You will be familiar with the CF and TVM buttons from other topic areas such as Quantitative Methods.
Answer these five CFA practice questions to test your readiness for the Level I Exam.
Corporate Finance is a slightly smaller topic in the Level II exam than in the Level I exam. The focus is less numerical at Level II than at Level I and instead on factors that would affect the valuations of projects and/or companies such as dividend and share repurchase policies, and ESG (Environmental, Social, and Governance) factors.
Looking for more guidance on how to prepare for Corporate Finance? Enroll in one of our CFA Level I Premium study packages to receive expert instruction, CFA Program study materials, and more. Give yourself the best chance to prepare, practice, and perform on the CFA exam.
Written by Kaplan Schweser experts, reviewed by Craig Prochaska, CFA.
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