Series 86 Syllabus — Blueprint & Learning Objectives
FINRA Series 86 syllabus mapped to the official functions with clear learning objectives and quick links to targeted practice.
This syllabus is based on FINRA’s official Series 86/87 Content Outline (Part I — Series 86). Use it as a checklist: master the valuation and forecasting toolkit, then drill questions until you can pick the best supported answer quickly.
Interpret the current macroeconomic environment using economic indicators and government statistics (e.g., GDP, inflation, interest rates, unemployment, consumer confidence, and disposable income).
Distinguish key macroeconomic drivers relevant to equity valuation and sector performance (growth, inflation, interest rates, credit availability, and liquidity conditions).
Explain how fiscal policy tools (government spending and taxation) can affect economic growth, inflation expectations, and sector outcomes (high level).
Explain how monetary policy tools and central bank actions can affect interest rates, risk premia, credit conditions, and equity valuations (high level).
Identify market forces that influence macro conditions (supply/demand, commodities, currency moves, and global capital flows) and relate them to industry impacts (high level).
Analyze short- and long-term trends in the economy and identify inflection points that may change the industry backdrop (high level).
Analyze demographic trends and assess how they can influence long-run demand, labor markets, and industry growth rates (high level).
Assess domestic and international developments (geopolitical events, trade dynamics, and cross-border macro shocks) and relate them to sector risk and opportunity (high level).
Identify key economic drivers that impact a covered industry and prioritize the subset that most directly affects demand, pricing, costs, and margins.
Use correlation studies and regression analysis concepts (high level) to test relationships between macro variables and industry/company performance drivers.
Differentiate correlation from causation and recognize when a relationship may be spurious or regime-dependent (high level).
Translate macro assumptions into scenario inputs for industry and company forecasts (e.g., rate paths, inflation assumptions, and growth scenarios).
Gather information about the industry sector
Assess current industry status using market size, growth rate, and product mix characteristics (high level).
Evaluate capital intensity and how it influences operating leverage, reinvestment needs, and cash flow profiles (high level).
Identify products offered in a sector and describe how product mix and substitution dynamics can affect growth and margins (high level).
Assess product pricing flexibility and pricing power concepts, including how competitive dynamics and customer behavior can constrain pricing (high level).
Analyze supplier dynamics, cost inputs, and supply curve considerations and relate them to margin expansion or compression (high level).
Analyze customer demand drivers and connect them to macro indicators, consumer behavior, and end-market exposure (high level).
Identify regulatory issues affecting the industry sector and explain how regulation can shift costs, barriers to entry, and profitability (high level).
Differentiate short-term vs long-term industry trends and classify them as secular, cyclical, or industry-specific (high level).
Assess product demand influences, competitive climate, and key factors affecting costs and profits in an industry (high level).
Evaluate relationships among companies within the same industry using comparative analysis of peer positioning and performance drivers (high level).
Assess potential entry and exit of competitors and/or products and evaluate the impact on pricing power and market share (high level).
Identify disruptive company risks and technology or business-model disruption themes that can change long-run industry economics (high level).
Evaluate relationships between industry and peripheral sectors (upstream suppliers, downstream customers, and substitutes) and how those linkages affect performance (high level).
Analyze intra-industry competition to determine how companies are positioned relative to direct peers (scale, cost structure, differentiation, and distribution advantages).
Analyze inter-industry competition and substitution to determine how companies compete outside their direct industry boundaries (high level).
Assess the potential impact of broader economic conditions and the regulatory environment on the industry sector’s outlook and risk profile (high level).
Analyze company and industry data (fundamental analysis)
Analyze a company’s current and historical financial statements and identify short- and long-term trends that affect the investment thesis (high level).
Use public-company filings (e.g., Forms 10-K and 10-Q) and primary financial statements (income statement, balance sheet, and cash flow statement) as inputs to fundamental analysis (high level).
Evaluate a company’s financial status using liquidity, profitability, leverage, and cash flow concepts (high level).
Evaluate a company’s legal and organizational structure and recognize how structure can affect reporting, risk, and comparability (high level).
Analyze supply chain factors and cost structure drivers and connect them to margin and profitability outcomes (high level).
Analyze revenue drivers and understand how volume, price, mix, and customer concentration can influence growth and risk (high level).
Explain the inter-relationships of the financial statements and calculate relevant ratios or metrics used in company analysis (high level).
Assess a company’s business plan and implementation quality by comparing strategic claims to measurable execution indicators (high level).
Evaluate qualitative and quantitative factors that influence profits and growth prospects, including management quality, business model strength, and competitive positioning (high level).
Assess contract structures at a high level and recognize how contract terms can affect revenue visibility, pricing power, and risk.
Evaluate capital expenditures and reinvestment needs and relate them to capacity, growth potential, and free cash flow generation (high level).
Assess current capacity and capacity for growth and relate capacity utilization to margin expansion potential and capex requirements (high level).
Evaluate innovation and new products/strategies and determine how they may affect competitive advantage and long-run growth (high level).
Perform product assessment (high level) and connect product competitiveness to demand, pricing flexibility, and profitability.
Analyze customer concentration and understand how dependence on a small number of customers can affect risk and bargaining power (high level).
Analyze subscriber acquisition costs (where applicable) and connect unit-economics concepts to sustainable growth (high level).
Calculate and interpret receivable turnover and connect it to credit policy, customer quality, and working capital needs (high level).
Calculate and interpret inventory turnover and connect it to demand forecasting, supply chain efficiency, and working capital discipline (high level).
Calculate and interpret payables turnover and connect it to supplier terms, working capital funding, and liquidity (high level).
Distinguish inventory accounting method concepts (LIFO vs FIFO) and recognize how methodology choices can affect reported earnings and comparability (high level).
Analyze lease accounting considerations (high level) and understand how leasing can affect leverage, cash flow, and valuation metrics.
Analyze pension liability accounting considerations (high level) and recognize how pension assumptions can affect earnings and balance sheet risk.
Calculate a company’s tax rate at a high level and recognize how tax structure and one-time items can distort comparability.
Explain deferred tax accounting concepts (high level) and recognize how deferred tax assets/liabilities may affect valuation and future earnings quality.
Analyze capital structure, debt structure, and maturity schedules and connect refinancing risk and covenant pressure to investment risk (high level).
Analyze working capital needs and trends and connect them to cash generation, liquidity, and business model characteristics (high level).
Evaluate the impact of corporate actions (M&A, restructuring, divestitures, and consolidations) on reported financials, comparability, and valuation (high level).
Compare a company’s accounting practices to industry peers and identify areas where methodology variance or conservatism/aggressiveness may affect reported results (high level).
Apply GAAP and FASB principle awareness at a high level to recognize how accounting rules and rule changes can affect reported performance and comparability.
Interpret adjusted (non-GAAP) financial information at a high level and evaluate whether adjustments improve comparability or obscure underlying economics.
Distinguish GAAP-adjusted results from underlying economic performance and identify when accounting presentation may diverge from cash economics (high level).
Calculate and interpret margin metrics (pre-tax margin, gross profit margin, and net profit margin) and relate changes to business drivers (high level).
Calculate and interpret ROE, ROA, and ROIC and explain what each suggests about profitability, efficiency, and value creation (high level).
Evaluate corporate governance factors using proxy statement disclosures (high level) and identify governance signals that can affect risk and long-run performance.
Make financial projections (forecast key statements)
Forecast income statement drivers, including sales, gross profit, and operating profit, using qualitative and quantitative inputs (high level).
Forecast cash flow sources and uses and relate operating, investing, and financing drivers to cash generation (high level).
Forecast balance sheet items that drive working capital and assess the implications for liquidity and cash needs (high level).
Project working capital requirements and connect working capital changes to free cash flow dynamics (high level).
Evaluate asset productivity concepts and relate asset efficiency to return metrics and reinvestment needs (high level).
Forecast ROA and ROE at a high level and connect expected return changes to operating performance and leverage.
Evaluate forecasting assumptions and support them using the data and analysis gathered from macro, industry, and company research (high level).
Translate qualitative insights (competitive position, pricing power, regulatory shifts) into quantitative model drivers (high level).
Perform sensitivity analysis on key forecast drivers (growth, margins, capex, and working capital) to understand valuation and thesis fragility (high level).
Monitor ongoing developments and update projections and model inputs as new information becomes available (high level).
Determine the company’s valuation (metrics and models)
Calculate and interpret price-to-earnings (P/E) and recognize when P/E is most informative (positive, stable earnings; high level).
Calculate and interpret price-to-book (P/B) on stated and tangible book value bases and recognize when P/B is commonly used (asset-heavy and financial contexts; high level).
Calculate and interpret price-to-free-cash-flow and recognize when cash-flow-based valuation is preferred to earnings-based valuation (high level).
Apply normalized P/E concepts for cyclical industries (mid-cycle or trend-line earnings) and explain why normalization improves comparability (high level).
Calculate and interpret the PEG ratio and recognize how growth assumptions can distort PEG comparisons (high level).
Calculate and interpret debt-to-EBITDA and relate it to credit risk and capital structure flexibility (high level).
Calculate and interpret debt-to-capital and debt-to-equity ratios (total and long-term) and relate them to leverage and solvency risk (high level).
Explain the dividend discount model (DDM) at a high level, identify its key inputs, and recognize when DDM is appropriate (stable dividend policies).
Explain discounted cash flow (DCF) valuation at a high level and identify key inputs (cash flows, discount rate/cost of capital, and terminal assumptions).
Calculate and interpret EV/EBITDA and recognize why EV multiples are capital-structure neutral (high level).
Calculate and interpret EV/sales and recognize when sales multiples are used (early-stage or low-margin contexts; high level).
Interpret leverage ratio and interest coverage ratio concepts and relate them to default risk and valuation sensitivity to rates (high level).
Estimate cost of capital concepts (high level) and explain how perceived risk affects required returns and valuation.
Calculate and interpret dividend yield, earnings yield, and free cash flow yield and use yields as alternative valuation lenses (high level).
Explain economic profit at a high level and relate value creation to ROIC versus cost of capital concepts.
Perform a sum-of-the-parts (SOTP) / private equity value analysis at a high level and explain when break-up value logic is useful (conglomerates and multi-segment businesses).
Select valuation metrics appropriate to the company’s industry, business model, profitability, and lifecycle stage (high level).
Translate valuation outputs into an investment recommendation (buy/hold/sell) by comparing price to value and incorporating risk and catalyst considerations (high level).
Forecast future valuation (catalysts, markets, and risk)
Describe characteristics of markets that influence price formation (liquidity, volatility, information flow, and market efficiency concepts; high level).
Identify factors that impact the perceived risk of an investment and how risk perception can change valuation and required returns (high level).
Recognize technical analysis concepts at a high level and identify when technical signals are used to frame timing, momentum, and trend behavior (high level).
Identify large shareholder exposure/overhang risks and explain how concentrated ownership can affect trading dynamics and valuation (high level).
Explain activist investor concepts at a high level and recognize how activism can create catalysts and alter valuation (strategy shifts, capital returns, break-ups).
Identify key catalysts that can alter a stock’s price and valuation, including macro, political, and company-specific events (high level).
Differentiate macro catalysts (rates, inflation, recession risk) from political/regulatory catalysts (policy shifts, enforcement actions) and company catalysts (earnings surprises, guidance changes, M&A, product launches).
Assess valuation relative to historical averages and explain how mean reversion or re-rating narratives can influence expected returns (high level).
Assess valuation relative to peer group and explain how relative valuation gaps can close through fundamentals, catalysts, or sentiment shifts (high level).
Identify macro, political, and company-specific patterns/events that can move stock prices and create investment opportunities (high level).
Update forecasts and recommendations as catalysts develop and as new data changes the probability-weighted thesis (high level).