fbpixel 101 concepts level I | IFT World - Part 5
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LM01 Alternative Investment Features, Methods, and Structures
LM01 Categories, Characteristics, and Compensation Structures of Alternative Investments
LM01 Corporate Structures and Ownership
LM01 Derivative Instrument and Derivative Market Features
LM01 Derivative Instrument and Derivative Market Features
LM01 Ethics and Trust in the Investment Profession
LM01 Ethics and Trust in the Investment Profession
LM01 Fixed-Income Instrument Features
LM01 Fixed-Income Securities: Defining Elements
LM01 Introduction to Financial Statement Analysis
LM01 Introduction to Financial Statement Analysis
LM01 Market Organization & Structure
LM01 Market Organization and Structure
LM01 Organizational Forms, Corporate Issuer Features, and Ownership
LM01 Portfolio Management Overview
LM01 Portfolio Management: An Overview
LM01 Rates and Returns
LM01 The Firm & Market Structures
LM01 Time Value of Money
LM01 Topics in Demand and Supply Analysis
LM02 Alternative Investment Performance and Returns
LM02 Analyzing Income Statements
LM02 Code of Ethics and Standards of Professional Conduct
LM02 Code of Ethics and Standards of Professional Conduct Profession
LM02 Financial Reporting Standards
LM02 Fixed Income Markets - Issuance Trading and Funding
LM02 Fixed-Income Cash Flows and Types
LM02 Forward Commitment and Contingent Claim Features and Instruments
LM02 Forward Commitment and Contingent Claim Features and Instruments
LM02 Introduction to Corporate Governance and Other ESG Considerations
LM02 Investors and Other Stakeholders
LM02 Organizing, Visualizing, and Describing Data
LM02 Performance Calculation and Appraisal of Alternative Investments
LM02 Portfolio Risk & Return: Part I
LM02 Portfolio Risk and Return Part I
LM02 Security Market Indexes
LM02 Security Market Indexes
LM02 The Firm and Market Structures
LM02 Time Value of Money in Finance
LM02 Understanding Business Cycles
LM03 Aggregate Output, Prices and Economic Growth
LM03 Analyzing Balance Sheets
LM03 Business Models & Risks
LM03 Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
LM03 Derivative Benefits, Risks, and Issuer and Investor Uses
LM03 Derivative Benefits, Risks, and Issuer and Investor Uses
LM03 Fiscal Policy
LM03 Fixed-Income Issuance and Trading
LM03 Guidance for Standards I-VII
LM03 Guidance for Standards I–VII
LM03 Introduction to Fixed Income Valuation
LM03 Investments in Private Capital: Equity and Debt
LM03 Market Efficiency
LM03 Market Efficiency
LM03 Portfolio Risk & Return: Part II
LM03 Portfolio Risk and Return Part II
LM03 Private Capital, Real Estate, Infrastructure, Natural Resources, and Hedge Funds
LM03 Probability Concepts
LM03 Statistical Measures of Asset Returns
LM03 Understanding Income Statements
LM04 An Introduction to Asset-Backed Securities
LM04 Analyzing Statements of Cash Flows I
LM04 Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives
LM04 Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives
LM04 Basics of Portfolio Planning & Construction
LM04 Basics of Portfolio Planning and Construction
LM04 Capital Investments
LM04 Common Probability Distributions
LM04 Fixed-Income Markets for Corporate Issuers
LM04 Introduction to the Global Investment Performance Standards (GIPS)
LM04 Introduction to the Global Investment Performance Standards (GIPS)
LM04 Monetary Policy
LM04 Overview of Equity Securities
LM04 Overview of Equity Securities
LM04 Probability Trees and Conditional Expectations
LM04 Real Estate and Infrastructure
LM04 Understanding Balance Sheets
LM04 Understanding Business Cycles
LM04 Working Capital and Liquidity.
LM05 Analyzing Statements of Cash Flows II
LM05 Capital Investments and Capital Allocation
LM05 Company Analysis: Past and Present
LM05 Fixed-Income Markets for Government Issuers
LM05 Introduction to Geopolitics
LM05 Introduction to Industry and Company Analysis
LM05 Monetary and Fiscal Policy
LM05 Natural Resources
LM05 Portfolio Mathematics
LM05 Pricing and Valuation of Forward Contracts and for an Underlying with Varying Maturities
LM05 Pricing and Valuation of Forward Contracts.
LM05 Sampling and Estimation
LM05 The Behavioral Biases of Individuals
LM05 The Behavioral Biases of Individuals
LM05 Understanding Cash Flow Statements
LM05 Understanding Fixed-Income Risk and Return
LM05 Working Capital & Liquidity
LM06 Analysis of Inventories
LM06 Capital Structure
LM06 Cost of Capital-Foundational Topics
LM06 Equity Valuation: Concepts and Basic Tools
LM06 Financial Analysis Techniques
LM06 Fixed-Income Bond Valuation: Prices and Yields
LM06 Fundamentals of Credit Analysis
LM06 Hedge Funds
LM06 Hypothesis Testing
LM06 Industry and Competitive Analysis
LM06 International Trade
LM06 Introduction to Geopolitics
LM06 Introduction to Risk Management
LM06 Introduction to Risk Management
LM06 Pricing and Valuation of Futures Contracts
LM06 Pricing and Valuation of Futures Contracts
LM06 Simulation Methods
LM07 Analysis of Long-Term Assets
LM07 Business Models
LM07 Capital Flows and the FX Market
LM07 Capital Structure
LM07 Company Analysis: Forecasting
LM07 Estimation and Inference
LM07 International Trade and Capital Flows
LM07 Introduction to Digital Assets
LM07 Introduction to Linear Regression
LM07 Inventories
LM07 Pricing and Valuation of Interest Rate and Other Swaps
LM07 Pricing and Valuation of Interest Rates and Other Swaps
LM07 Technical Analysis
LM07 Yield and Yield Spread Measures for Fixed-Rate Bonds.
LM08 Currency Exchange Rates
LM08 Equity Valuation: Concepts and Basic Tools
LM08 Exchange Rate Calculations
LM08 Fintech in Investment Management
LM08 Hypothesis Testing
LM08 Long Lived Assets
LM08 Measures of Leverage
LM08 Pricing and Valuation of Options
LM08 Pricing and Valuation of Options
LM08 Topics in Long-Term Liabilities and Equity
LM08 Yield and Yield Spread Measures for Floating-Rate Instruments
LM09 Analysis of Income Taxes
LM09 Income Taxes
LM09 Option Replication Using Put-Call Parity
LM09 Option Replication Using Put–Call Parity
LM09 Parametric and Non-Parametric Tests of Independence
LM09 The Term Structure of Interest Rates: Spot, Par, and Forward Curves
LM10 Financial Reporting Quality
LM10 Interest Rate Risk and Return
LM10 Non-current (Long-Term) Liabilities
LM10 Simple Linear Regression
LM10 Valuing a Derivative Using a One-Period Binomial Model
LM10 Valuing a Derivative Using a One-Period Binomial Model
LM11 Financial Analysis Techniques
LM11 Financial Reporting Quality
LM11 Introduction to Big Data Techniques
LM11 Yield-Based Bond Duration Measures and Properties
LM12 Applications of Financial Statement Analysis
LM12 Introduction to Financial Statement Modeling
LM12 Yield-Based Bond Convexity and Portfolio Properties
LM13 Curve-Based and Empirical Fixed-Income Risk Measures
LM14 Credit Risk
LM15 Credit Analysis for Government Issuers
LM16 Credit Analysis for Corporate Issuers
LM17 Fixed-Income Securitization
LM18 Asset-Backed Security (ABS) Instrument and Market Features
LM19 Mortgage-Backed Security (MBS) Instrument and Market Features
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Category: 101 Concepts for Level I

Concept 40: Accruals and Valuation Adjustments

Accruals: The accrual accounting principle requires that a firm recognize revenue when they are earned and expenses when they are incurred. At times, there is a timing difference between the cash movements and the recognition of revenues or expenses. In such cases accrual entries are required. If cash is transferred at the same time when the revenue or expense is incurred, there is no need for accrual entries. The four types of accrual entries are: Unearned revenue: (Cash is received first, and the goods/services will be delivered later.) Increase cash and create a liability for the goods/services that the firm… Read More

101 concepts level I

Concept 41: International Accounting Standards Board’s (IASB) Conceptual Framework

Objective of financial statements: As per the IFRS framework, the objective of financial statements is ‘to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity’. Qualitative characteristics: The two fundamental qualitative characteristics are: Relevance: Financial statements should be useful both for making forecasts as well as to evaluate past forecasts. They should be timely and sufficiently detailed and important facts should not be omitted. Faithful representation: Information presented should be complete, neutral and free from errors. The four supplementary qualitative characteristics… Read More

101 concepts level I

Concept 42: Revenue Recognition

Criteria for revenue recognition: According to the accrual method of accounting, revenue is recognized when earned and expenses are recognized when incurred. Accrual accounting allows firms to manipulate net income through their choices about revenue and expense recognition. Hence to reduce manipulation, standard setting bodies have defined a criteria for revenue recognition. As per U.S. GAAP, revenue can be recognized if the following conditions are met: There is evidence of an arrangement between the buyer and seller. The product has been delivered or the service has been rendered. The price is determined or determinable. The seller is reasonably sure of… Read More

101 concepts level I

Concept 43: Expense Recognition

Matching principle: The most important principle of expense recognition is the matching principle, under which the expenses incurred to generate revenue are recognized in the same period as revenue. If some goods bought in the current year remain unsold at the end of the year, they are not included in the cost of goods sold for the current year. If they are sold in the next year, they will be included in the cost of goods sold for the next year. Periodic costs: Expenses that cannot be tied directly to generation of revenues are called periodic costs. They are expensed… Read More

101 concepts level I

Concept 44: Non-Recurring Items & Changes in Accounting Policies

Non-recurring items: A company needs to separate revenues and expenses into items that are likely to continue in the future and items that are not likely to continue in the future. This helps analysts to predict future earnings of the company. Items that are not likely to continue can be classified as: Discontinued operations: An operation that the company has disposed in the current period or is planning to dispose in future. On the income statement, discontinued operations are shown as a separate line item, net of tax, after net income from continuing operations. Extraordinary items: IFRS does not allow… Read More

101 concepts level I

Concept 45: Earnings Per Share (EPS)

Earnings per share is a very important profitability measure. It depicts the earnings per ordinary share. Some basic terminology related to EPS are: Potentially dilutive securities: Securities that can be converted into ordinary share are called potentially dilutive securities. This includes convertible bonds, convertible preferred stock, and employee stock options. Simple capital structure: If a company has no potentially dilutive securities, it is said to have a simple capital structure. Complex capital structure: If a company has potentially dilutive securities, it is said to have a complex capital structure. Dilutive securities: A potentially dilutive security that decreases EPS when exercised… Read More

101 concepts level I

Concept 46: Measurement Bases for Different Types of Assets and Liabilities

Measurement bases Historical cost – Cost at which the item was actually purchased. Historical cost is highly reliable, but its relevance to an analyst declines as values change. Fair value – Cost at which an item can be purchased now, in an arm’s length transaction. Fair value is more relevant to an analyst but is less reliable compared to historical cost, because it involves some level of judgment. Different types of assets and liabilities Current assets Cash and cash equivalents – Highly liquid, low risk securities with maturity less than 90 days. They are reported at either fair value or… Read More

101 concepts level I

Concept 47: Components of Shareholders’ Equity

The six components of equity are: Contributed capital: Total amount paid in by common and preferred shareholders. Treasury shares: These are shares that have been repurchased by the company, but not yet retired. Retained earnings: Cumulative income of firm since inception that has not been distributed as dividends. Accumulated other comprehensive income: These include items which lead to changes in equity but are not part of income statement or from issuing stock, reacquiring stock, and paying dividends. Non-controlling interest (minority interest): It is the portion of a subsidiary not owned by parent company. For example, if a firm owns 80%… Read More

101 concepts level I

Concept 48: Liquidity and Solvency Ratios

Liquidity ratios measure a company’s ability to meet current liabilities. The higher the liquidity ratio, the more likely the firm will be able to meet its short term obligations. Current ratio – It is the most widely used measure of liquidity. Current ratio = current assets / current liabilities     Quick ratio – It is a more conservative measure of liquidity. It excludes inventories and less liquid assets from the numerator     Cash ratio – It is the most conservative measure of liquidity. Even receivables are excluded from the numerator.     Solvency ratios measure a company’s ability to meet long-term obligations. A high… Read More

101 concepts level I

Concept 49: Steps in the Preparation of Direct and Indirect Cash Flow Statements

Operating Cash Flow Direct method: In the direct method, we take each item from the income statement and convert it to its cash equivalent by removing the impact of accrual accounting. The rules to adjust are: Increase in asset is use of cash (-ve adjustment) and decrease in asset is source of cash (+ve adjustment) Increase in liability is source of cash (+ve adjustment) and decrease in liability is use of cash (-ve adjustment) Cash collected from customers: Adjust sales for changes in accounts receivables and unearned revenue. Cash for inputs: Adjust COGS for changes in inventory and accounts payable…. Read More

101 concepts level I
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