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Flashcard 1425654549772

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#cfa-level-1 #economics #economics-in-a-global-context #los #reading-20-international-trade-and-capital-flows

Question

if the price of exports decreases relative to the price of imports, the terms of trade have deteriorated because the country will be able to [...]

Answer

purchase fewer imports with the same amount of exports.

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if the price of exports decreases relative to the price of imports, the terms of trade have deteriorated because the country will be able to purchase fewer imports with the same amount of exports.

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2.1. Basic Terminology
e to a South African diamond exporter, Britain would classify the cost of the insurance as an export of services to South Africa. Other examples of services exported/imported include engineering, consulting, and medical services. The terms of trade are defined as the ratio of the price of exports to the price of imports, representing those prices by export and import price indices, respectively. The terms of trade capture the relative cost of imports in terms of exports. If the prices of exports increase relative to the prices of imports, the terms of trade have improved because the country will be able to purchase more imports with the same amount of exports.2 For example, when oil prices increased during 2007–2008, major oil exporting countries experienced an improvement in their terms of trade because they had to export less oil in order to purchase the same amount of imported goods. In contrast, if the price of exports decreases relative to the price of imports, the terms of trade have deteriorated because the country will be able to purchase fewer imports with the same amount of exports. Because each country exports and imports a large number of goods and services, the terms of trade of a country are usually measured as an index number (normalized to 100 in some base year) that represents a ratio of the average price of exported goods and services to the average price of imported goods and services. Exhibit 1shows the terms of trade reported in Salvatore (2010). A value over (under) 100 indicates that the country, or group of countries, experienced better (worse) terms of trade rel

Flashcard 1426250665228

Tags

#cfa-level #economics #microeconomics #study-session-4

Question

[...] covers the theory of the consumer, which addresses the demand for goods and services by individuals who make decisions to maximize the satisfaction they receive from present and future consumption.

Answer

Reading 14

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Reading 14 covers the theory of the consumer, which addresses the demand for goods and services by individuals who make decisions to maximize the satisfaction they receive from present and future

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Study Session 4
cribe the marketplace behavior of consumers and firms. Reading 13 explains the concepts and tools of demand and supply analysis—the study of how buyers and sellers interact to determine transaction prices and quantities. Reading 14 covers the theory of the consumer, which addresses the demand for goods and services by individuals who make decisions to maximize the satisfaction they receive from present and future consumption. Reading 15 deals with the theory of the firm, focusing on the supply of goods and services by profit-maximizing firms. That reading provides the basis for understanding the c

Flashcard 1429056130316

Tags

#sister-miriam-joseph #trivium

Question

studying the liberal arts is an intransitive activity; the effect of studying these arts stays within [...] and perfects the faculties of the mind and spirit.

Answer

the individual

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studying the liberal arts is an intransitive activity; the effect of studying these arts stays within the individual and perfects the faculties of the mind and spirit.

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Flashcard 1429093616908

Tags

#sister-miriam-joseph #trivium

Question

[...] is a characteristic of matter only, whereas number is a characteristic of both matter and spirit.

Answer

Extension

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Extension is a characteristic of matter only, whereas number is a characteristic of both matter and spirit.) The function of the trivium is the training of the mind for the study of matter and sp

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Flashcard 1430315994380

Tags

#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4

Question

As the price of a good rises, buyers will choose to buy less of it, and as its price falls, they buy more. This is called the [...].

Answer

law of demand

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d><head>In general, economists believe that as the price of a good rises, buyers will choose to buy less of it, and as its price falls, they buy more. This is such a ubiquitous observation that it has come to be called the law of demand , although we shall see that it need not hold in all circumstances.<html>

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3.1. The Demand Function and the Demand Curve
head> We first analyze demand. The quantity consumers are willing to buy clearly depends on a number of different factors called variables. Perhaps the most important of those variables is the item’s own price. In general, economists believe that as the price of a good rises, buyers will choose to buy less of it, and as its price falls, they buy more. This is such a ubiquitous observation that it has come to be called the law of demand , although we shall see that it need not hold in all circumstances. Although a good’s own price is important in determining consumers’ willingness to purchase it, other variables also have influence on that decision, such as consumers’ inco

Flashcard 1439824481548

Tags

#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4

Question

What is the main difference between monopolistic competition and perfect competition?

Answer

Product differentiation

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In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the

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2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. 2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <body><html>

Flashcard 1442536099084

Tags

#cfa #cfa-level-1 #economics #lol #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4

Question

Objectives can be classified in profitability or on [...]

Answer

controlling risk

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When managers of for-profit companies have been surveyed about the objectives of the companies they direct, researchers have often concluded that a) companies frequently have multiple objectives; b) objectives can often be classified as focused on profitability (e.g., maximizing profits, increasing market share) or on controlling risk (e.g., survival, stable earnings

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2. OBJECTIVES OF THE FIRM
be known with certainty (i.e., the theory of the firm under conditions of certainty). The main contrast of this type of analysis is to the theory of the firm under conditions of uncertainty, where prices, and therefore profit, are uncertain. Under market uncertainty, a range of possible profit outcomes is associated with the firm’s decision to produce a given quantity of goods or services over a specific time period. Such complex theory typically makes simplifying assumptions. When managers of for-profit companies have been surveyed about the objectives of the companies they direct, researchers have often concluded that a) companies frequently have multiple objectives; b) objectives can often be classified as focused on profitability (e.g., maximizing profits, increasing market share) or on controlling risk (e.g., survival, stable earnings growth); and c) managers in different countries may have different emphases. Finance experts frequently reconcile profitability and risk objectives by stating that the objective of the firm is, or should be, shareholder wealth maximization (i.e.,

Flashcard 1450954329356

Tags

#reestructuracion-financiera

Question

Objetivos de una reestructuración financiera

•Elevar [...]

Answer

la productividad.

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Objetivos de una reestructuración financiera •Disminuir los costos financieros. •Reducir el nivel de endeudamiento. •Elevar la productividad. •Mejorar la mezcla entre recursos internos y externos. •Mejorar la posición de flujos.

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Flashcard 1450964028684

Tags

#reestructuracion-financiera

Question

Para llevar a cabo un proyecto de reestructura financiera es necesario dividirlo en diferentes fases, las cuales podemos conjuntar de la siguiente manera:

Primera fase: [...]

Segunda Fase: Marco institucional

Tercera fase: Estrategia de reestructuración

Cuarta fase: [...]

Answer

Marco de referencia.

Análisis derivado de la reestructura financiera

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Para llevar a cabo un proyecto de reestructura financiera es necesario dividirlo en diferentes fases, las cuales podemos conjuntar de la siguiente manera: Primera fase: Marco de referencia. Es el momento actual que está viviendo la empresa sin llevar a cabo una reestructuración financiera. Es necesario conocer, entre otros, los niveles de ventas, costos, utilidades, f

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Flashcard 1457302670604

Tags

#cfa #cfa-level-1 #economics #introduction #lol #microeconomics #reading-15-demand-and-supply-analysis-the-firm #study-session-4

Question

What is the main focus of reading 15?

Answer

The cost side of the profit equation for companies competing in market economies under perfect competition.

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The main focus of this reading is the cost side of the profit equation for companies competing in market economies under perfect competition.

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1. INTRODUCTION
ined by the demand and supply behavior in the markets into which the firm sells/provides its goods or services. Costs are a function of the demand and supply interactions in resource markets, such as markets for labor and for physical inputs. The main focus of this reading is the cost side of the profit equation for companies competing in market economies under perfect competition. A subsequent reading will examine the different types of markets into which a firm may sell its output. The study of the profit-maximizing firm in a single time period is t

Flashcard 1477178952972

Tags

#biochem #biology #cell

Question

Five species have emerged as the foremost model organisms for molecular genetic studies. In order of increasing size, they are the [5 species]. Each has had its genome sequenced

Answer

nematode worm Caenorhabditis elegans, the fly Drosophila melanogaster, the zebrafish Danio rerio, the mouse Mus musculus, and the human, Homo sapiens

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Five species have emerged as the foremost model organisms for molecular genetic studies. In order of increasing size, they are the nematode worm Caenorhabditis elegans, the fly Drosophila melanogaster, the zebrafish Danio rerio, the mouse Mus musculus, and the human, Homo sapiens. Each has had its genome sequenced

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Flashcard 1477245013260

Tags

#bayes #programming #r #statistics

Question

In other words, the mean of the distribution is the value that [minimizes what?]. In this way, the mean is a central tendency of the distribution

Answer

minimizes the expected squared deviation

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In other words, the mean of the distribution is the value that minimizes the expected squared deviation. In this way, the mean is a central tendency of the distribution

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Flashcard 1477328375052

Tags

#deeplearning #neuralnetworks

Question

The quin tessen tial example of a deep learning mo del is the feedforw ard deep net w ork or m ultila y er p erceptron (MLP). A multila y er p erceptron is just a mathematical function mapping some set of input v alues to output v alues. The function is formed b y [doing what to what?] W e can think of eac h application of a diﬀeren t mathematical function as providing a new representation of the input.

Answer

comp osing many simpler functions.

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xample of a deep learning mo del is the feedforw ard deep net w ork or m ultila y er p erceptron (MLP). A multila y er p erceptron is just a mathematical function mapping some set of input v alues to output v alues. The function is formed b y comp osing many simpler functions. W e can think of eac h application of a diﬀeren t mathematical function as providing a new representation of the input.<body><html>

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Flashcard 1477346725132

Tags

#deeplearning #neuralnetworks

Question

Another approac h, used b y deep probabilistic mo dels, regards the depth of a mo del as b eing not the depth of the computational graph but the depth of the graph describing how [...]

Answer

concepts are related to each other.

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Another approac h, used b y deep probabilistic mo dels, regards the depth of a mo del as b eing not the depth of the computational graph but the depth of the graph describing how concepts are related to each other.

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Flashcard 1477349870860

Tags

#deeplearning #neuralnetworks

Question

How ev er, deep learning can safely b e regarded as the study of mo dels that either involv e a greater amount of [...or...] than traditional mac hine learning do es

Answer

comp osition of learned functions or learned concepts

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How ev er, deep learning can safely b e regarded as the study of mo dels that either inv olv e a greater amount of comp osition of learned functions or learned concepts than traditional mac hine learning do es

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Flashcard 1477987929356

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#cfa-level-1 #reading-23-financial-reporting-mechanics

Question

Difficulty usually arises when a cash receipt or disbursement occurs in a [...] than the [...], or when the reportable values of assets vary.

Answer

different period than the related revenue or expense

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Flashcard 1478069718284

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#cfa-level-1 #reading-23-financial-reporting-mechanics

Question

Some assets (e.g., a particular class of investment securities) are shown on the balance sheet at their current market value, but changes in market value bypass the income statement and are recorded directly into shareholders’ equity under a component referred to as “ [...] ”

Answer

other comprehensive income.

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Some assets (e.g., a particular class of investment securities) are shown on the balance sheet at their current market value, but changes in market value bypass the income statement and are recorded directly into shareholders’ equity under a compon

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ved and the corresponding liability to deliver newsletters) and, subsequently, 12 future adjusting entries, the first one of which was illustrated as Transaction 12. Each adjusting entry reduces the liability and records revenue. In practice, a large amount of unearned revenue may cause some concern about a company’s ability to deliver on this future commitment. Conversely, a positive aspect is that increases in unearned revenue are an indicator of future revenues. For example, a large liability on the balance sheet of an airline relates to cash received for future airline travel. Revenue will be recognized as the travel occurs, so an increase in this liability is an indicator of future increases in revenue. <body><html>

Flashcard 1478073126156

Tags

#cfa-level-1 #reading-23-financial-reporting-mechanics

Question

Where valuation adjustment entries are required for assets, the basic pattern is the following for increases in assets:

An asset is increased with the other side of the equation being a gain on [...] or Increase to [...]

Answer

the income statement

other comprehensive income.

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Where valuation adjustment entries are required for assets, the basic pattern is the following for increases in assets: An asset is increased with the other side of the equation being a gain on the income statement or an increase to other comprehensive income. An asset is decreased : An asset is decreased with the other side of the equation being a loss on the income statement or a decrease to other comprehensive income.</s

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Flashcard 1478168022284

Tags

#cfa-level-1 #reading-23-financial-reporting-mechanics

Question

How can you identify the types of accruals and valuation entries in an entity’s financial statements?

Answer

MD&A and in the significant accounting policies footnote, both found in the annual report.

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An important first step in analyzing financial statements is identifying the types of accruals and valuation entries in an entity’s financial statements. Most of these items will be noted in the critical accounting policies/estimates section of management’s discussion and analysi

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7. USING FINANCIAL STATEMENTS IN SECURITY ANALYSIS
ions of balance sheet accounts. Accruals and valuation entries require considerable judgment and thus create many of the limitations of the accounting model. Judgments could prove wrong or, worse, be used for deliberate earnings manipulation. An important first step in analyzing financial statements is identifying the types of accruals and valuation entries in an entity’s financial statements. Most of these items will be noted in the critical accounting policies/estimates section of management’s discussion and analysis (MD&A) and in the significant accounting policies footnote, both found in the annual report. Analysts should use this disclosure to identify the key accruals and valuations for a company. The analyst needs to be aware, as Example 4 shows, that the manipulation of earnings and a

Flashcard 1478171954444

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#cfa-level-1 #reading-23-financial-reporting-mechanics

Question

An important first step in analyzing financial statements is identifying the [...] and [...] in an entity’s financial statements. (Found in MD&A)

Answer

types of accruals

valuation entries

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Flashcard 1478275239180

Tags

#48-laws-of-power

Question

What is the most potent weapon in your arsenal?

Answer

Deception

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If deception is the most potent weapon in your arsenal, then patience in all things is your crucial shield.

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Flashcard 1478280219916

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#cfa-level-1 #reading-22-financial-statement-analysis-intro

Question

What is the most common increase for retained earnings?

Answer

Net income

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For retained earnings, income is the most common increase and a dividend payment is the most common decrease.

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3.1.3. Statement of Changes in Equity
nce, any increases during the period, any decreases during the period, and the ending balance. For paid-in capital, an example of an increase is a new issuance of equity and an example of a decrease is a repurchase of previously issued stock. For retained earnings, income (both net income as reported on the income statement and other comprehensive income) is the most common increase and a dividend payment is the most common decrease. Volkswagen’s balance sheet in Exhibit 3 shows that equity at the end of 2009 totaled €37,430 million, compared with €37,388 million at the end of 2008. The company’s statem

Article 1478405000460

2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
#cfa-level-1 #reading-25-understanding-income-statement

On the top line of the income statement, companies typically report revenue. Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the ordinary activities of a business. The term net revenue means that the revenue number is reported after adjustments (e.g., for cash or volume discounts, or for estimated returns). Revenue may be called sales or turnover.4 Exhibits 1 and 2 show the income statements for Groupe Danone (Euronext Paris: BN), a French food manufacturer, and Kraft Foods (NYSE:KFT), a US food manufacturer.5 For the year ended 31 December 2009, Danone reports €14.98 billion of net revenue, whereas Kraft reports $40.39 billion of net revenue. Note that Danone lists the years in increasing order from left to right with the most recent year in the right-most column, whereas Kraft lists the years in decreasing order with the most recent year listed in the left-most column. Different orderings of chronological information are

Annotation 1478406311180

#cfa-level-1 #reading-25-understanding-income-statement

On the top line of the income statement, companies typically report revenue.

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Flashcard 1478407359756

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#cfa-level-1 #reading-25-understanding-income-statement

Question

On the top line of the income statement, companies typically report [...].

Answer

revenue

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Parent (intermediate) annotation

Open it
On the top line of the income statement, companies typically report revenue.

Original toplevel document

Annotation 1478408932620

#cfa-level-1 #reading-25-understanding-income-statement

Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the ordinary activities of a business.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
On the top line of the income statement, companies typically report revenue. Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the ordinary activities of a business. The term net revenue means that the revenue number is reported after adjustments (e.g., for cash or volume discounts, or for estimated returns). Revenue may be called sales or turnover

Flashcard 1478409981196

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the [...] of a business.

Answer

ordinary activities

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Parent (intermediate) annotation

Open it
Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the ordinary activities of a business.

Original toplevel document

Flashcard 1478411554060

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

The term [...]means that the revenue number is reported after adjustments.

Answer

net revenue

status	not learned	measured difficulty	37% [default]	last interval [days]
repetition number in this series	0	memorised on		scheduled repetition
scheduled repetition interval		last repetition or drill

2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
On the top line of the income statement, companies typically report revenue. Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the ordinary activities of a business. The term net revenue means that the revenue number is reported after adjustments (e.g., for cash or volume discounts, or for estimated returns). Revenue may be called sales or turnover.4 Exhibits 1 and 2 sh

Flashcard 1478414699788

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

What are some examples of adjustments to revenue?

Answer

cash or volume discounts, or estimated returns.

status	not learned	measured difficulty	37% [default]	last interval [days]
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scheduled repetition interval		last repetition or drill

2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
On the top line of the income statement, companies typically report revenue. Revenue generally refers to amounts charged (and expected to be received) for the delivery of goods or services in the ordinary activities of a business. The term net revenue means that the revenue number is reported after adjustments (e.g., for cash or volume discounts, or for estimated returns). Revenue may be called sales or turnover.4 Exhibits 1 and 2 sh

Annotation 1478417321228

#cfa-level-1 #reading-25-understanding-income-statement

Revenue may be called sales or turnover.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
to be received) for the delivery of goods or services in the ordinary activities of a business. The term net revenue means that the revenue number is reported after adjustments (e.g., for cash or volume discounts, or for estimated returns). Revenue may be called sales or turnover.4 Exhibits 1 and 2 show the income statements for Groupe Danone (Euronext Paris: BN), a French food manufacturer, and Kraft Foods (NYSE:KFT), a US food manufacturer.5 For the year ended

Flashcard 1478418369804

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Revenue may be called sales or [...].

Answer

turnover

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Parent (intermediate) annotation

Open it
Revenue may be called sales or turnover.

Original toplevel document

Annotation 1478420991244

#cfa-level-1 #reading-25-understanding-income-statement

Expenses reflect outflows, depletions of assets, and incurrences of liabilities in the course of the activities of a business.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
hereas Kraft lists the years in decreasing order with the most recent year listed in the left-most column. Different orderings of chronological information are common. Differences in presentations of items, such as expenses, are also common. Expenses reflect outflows, depletions of assets, and incurrences of liabilities in the course of the activities of a business. Expenses may be grouped and reported in different formats, subject to some specific requirements. For example, Danone reports research and development expenses as a separate line item w

Flashcard 1478422039820

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Expenses reflect outflows, [...], and incurrences of liabilities in the course of the activities of a business.

Answer

depletions of assets

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Parent (intermediate) annotation

Open it
Expenses reflect outflows, depletions of assets, and incurrences of liabilities in the course of the activities of a business.

Original toplevel document

Annotation 1478423612684

#cfa-level-1 #reading-25-understanding-income-statement

Expenses may be grouped and reported in different formats, subject to some specific requirements. For example, Danone reports research and development expenses as a separate line item whereas Kraft combines research costs with marketing and administration costs and reports the total in a single line item.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
of chronological information are common. Differences in presentations of items, such as expenses, are also common. Expenses reflect outflows, depletions of assets, and incurrences of liabilities in the course of the activities of a business. Expenses may be grouped and reported in different formats, subject to some specific requirements. For example, Danone reports research and development expenses as a separate line item whereas Kraft combines research costs with marketing and administration costs and reports the total in a single line item. Another difference is how the companies indicate that an amount on the income statement results in a reduction in net income. Danone shows expenses, such as cost of goods s

Annotation 1478425185548

#cfa-level-1 #reading-25-understanding-income-statement

Net income also includes gains and losses , which are increases and decreases in economic benefits, respectively, which may or may not arise in the ordinary activities of the business.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
anone and €160 million is attributable to minority interests. For Kraft, $3,021 million of the net earnings amount is attributable to the shareholders of Kraft Foods and $7 million is attributable to the non-controlling interest. Net income also includes gains and losses , which are increases and decreases in economic benefits, respectively, which may or may not arise in the ordinary activities of the business. For example, when a manufacturing company sells its products, these transactions are reported as revenue, and the costs incurred to generate these revenues are expenses and are presente

Flashcard 1478426234124

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Net income also includes [...] and [...] that may not be in the ordinary activities of the business.

Answer

gains

losses

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Parent (intermediate) annotation

Open it
Net income also includes gains and losses , which are increases and decreases in economic benefits, respectively, which may or may not arise in the ordinary activities of the business.

Original toplevel document

Annotation 1478428593420

#cfa-level-1 #reading-25-understanding-income-statement

if a manufacturing company sells surplus land that is not needed, the transaction is reported as a gain or a loss.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
dinary activities of the business. For example, when a manufacturing company sells its products, these transactions are reported as revenue, and the costs incurred to generate these revenues are expenses and are presented separately. However, if a manufacturing company sells surplus land that is not needed, the transaction is reported as a gain or a loss. The amount of the gain or loss is the difference between the carrying value of the land and the price at which the land is sold. For example, in Exhibit 2, Kraft reports a loss (proceed

Flashcard 1478429641996

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

if a manufacturing company sells surplus land that is not needed, the transaction is reported as a [...] or [...].

Answer

gain

a loss

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Parent (intermediate) annotation

Open it
if a manufacturing company sells surplus land that is not needed, the transaction is reported as a gain or a loss.

Original toplevel document

Annotation 1478432001292

#cfa-level-1 #reading-25-understanding-income-statement

The amount of the gain or loss when selling land is the difference between the carrying value of the land and the price at which the land is sold.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
are reported as revenue, and the costs incurred to generate these revenues are expenses and are presented separately. However, if a manufacturing company sells surplus land that is not needed, the transaction is reported as a gain or a loss. The amount of the gain or loss is the difference between the carrying value of the land and the price at which the land is sold. For example, in Exhibit 2, Kraft reports a loss (proceeds, net of carrying value) of $6 million on divestitures in fiscal 2009. Kraft discloses in the notes to consolidated financial st

Flashcard 1478433836300

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

The amount of the gain or loss when selling land is the difference between the [...] of the land and the price at which the land is sold.

Answer

carrying value

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Parent (intermediate) annotation

Open it
The amount of the gain or loss when selling land is the difference between the carrying value of the land and the price at which the land is sold.

Original toplevel document

Flashcard 1478436719884

Tags

#investopedia

Question

A [...] is calculated in the balance sheet as (original cost – accumulated depreciation) for tangible and physical assets

Answer

carrying value

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Carrying Value Definition | Investopedia
What is a 'Carrying Value' A carrying value is calculated in the balance sheet as (original cost – accumulated depreciation), and this formula applies to tangible, or physical, assets. If a company purchases a patent or some other intellectual property item, the formula for carrying value is original cost less amortization expense. Intangible assets must be reviewed f

Annotation 1478444584204

#cfa-level-1 #reading-25-understanding-income-statement

The definition of income encompasses both revenue and gains and the definition of expenses encompasses both expenses that arise in the ordinary activities of the business and losses.

Thus, net income (profit or loss) can be defined as:

a) income minus expenses, or equivalently

b) revenue plus other income plus gains minus expenses, or equivalently

c) revenue plus other income plus gains minus expenses in the ordinary activities of the business minus other expenses, and minus losses.

The last definition can be rearranged as follows: net income equals:

(i) revenue minus expenses in the ordinary activities of the business, plus (ii) other income minus other expenses, plus (iii) gains minus losses.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
estitures in fiscal 2009. Kraft discloses in the notes to consolidated financial statements that the assets sold included a nutritional energy bar operation in the United States, a juice operation in Brazil, and a plant in Spain. The definition of income encompasses both revenue and gains and the definition of expenses encompasses both expenses that arise in the ordinary activities of the business and losses.6 Thus, net income (profit or loss) can be defined as: a) income minus expenses, or equivalently b) revenue plus other income plus gains minus expenses, or equivalently c) revenue plus other income plus gains minus expenses in the ordinary activities of the business minus other expenses, and minus losses. The last definition can be rearranged as follows: net income equals (i) revenue minus expenses in the ordinary activities of the business, plus (ii) other income minus other expenses, plus (iii) gains minus losses. In addition to presenting the net income, income statements also present items, including subtotals, which are significant to users of financial statements. Some of the ite

Annotation 1478446943500

#cfa-level-1 #reading-25-understanding-income-statement

Certain items, such as revenue, finance costs, and tax expense, are required to be presented separately on the face of the income statement.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
3; In addition to presenting the net income, income statements also present items, including subtotals, which are significant to users of financial statements. Some of the items are specified by IFRS but other items are not specified.7 Certain items, such as revenue, finance costs, and tax expense, are required to be presented separately on the face of the income statement. IFRS additionally require that line items, headings, and subtotals relevant to understanding the entity’s financial performance should be presented even if not specified. Expenses may b

Flashcard 1478447992076

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Certain items, such as revenue, finance costs, and tax expense, are required by IFRS to be presented [...] on the face of the income statement.

Answer

separately

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Parent (intermediate) annotation

Open it
Certain items, such as revenue, finance costs, and tax expense, are required to be presented separately on the face of the income statement.

Original toplevel document

Annotation 1478450613516

#cfa-level-1 #reading-25-understanding-income-statement

IFRS additionally require that line items, headings, and subtotals relevant to understanding the entity’s financial performance should be presented even if not specified.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
of financial statements. Some of the items are specified by IFRS but other items are not specified.7 Certain items, such as revenue, finance costs, and tax expense, are required to be presented separately on the face of the income statement. IFRS additionally require that line items, headings, and subtotals relevant to understanding the entity’s financial performance should be presented even if not specified. Expenses may be grouped together either by their nature or function. Grouping together expenses such as depreciation on manufacturing equipment and depreciation on administrative facili

Annotation 1478452186380

#cfa-level-1 #reading-25-understanding-income-statement

Expenses may be grouped together either by their nature or function.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
equired to be presented separately on the face of the income statement. IFRS additionally require that line items, headings, and subtotals relevant to understanding the entity’s financial performance should be presented even if not specified. Expenses may be grouped together either by their nature or function. Grouping together expenses such as depreciation on manufacturing equipment and depreciation on administrative facilities into a single line item called “depreciation” is an example of a

Flashcard 1478453234956

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Expenses may be grouped together either by their [...] or [...].

Answer

nature

function.

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Parent (intermediate) annotation

Open it
Expenses may be grouped together either by their nature or function.

Original toplevel document

Annotation 1478455594252

#cfa-level-1 #reading-25-understanding-income-statement

Grouping together expenses such as depreciation on manufacturing equipment and depreciation on administrative facilities into a single line item called “depreciation” is an example of a grouping by nature of the expense.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
t. IFRS additionally require that line items, headings, and subtotals relevant to understanding the entity’s financial performance should be presented even if not specified. Expenses may be grouped together either by their nature or function. Grouping together expenses such as depreciation on manufacturing equipment and depreciation on administrative facilities into a single line item called “depreciation” is an example of a grouping by nature of the expense. An example of grouping by function would be grouping together expenses into a category such as cost of goods sold, which may include labour and material costs, depreciation, some sala

Flashcard 1478456904972

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Grouping depreciation on manufacturing equipment and depreciation on administrative facilities into a single line item called “depreciation” is an example of grouping by [...] of the expense.

Answer

grouping by nature

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Parent (intermediate) annotation

Open it
Grouping together expenses such as depreciation on manufacturing equipment and depreciation on administrative facilities into a single line item called “depreciation” is an example of a grouping by nature of the expense.

Original toplevel document

Annotation 1478459264268

#cfa-level-1 #reading-25-understanding-income-statement

An example of grouping by function would be grouping together expenses into a category such as cost of goods sold, which may include labour and material costs, depreciation, some salaries (e.g., salespeople’s), and other direct sales related expenses.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
nature or function. Grouping together expenses such as depreciation on manufacturing equipment and depreciation on administrative facilities into a single line item called “depreciation” is an example of a grouping by nature of the expense. An example of grouping by function would be grouping together expenses into a category such as cost of goods sold, which may include labour and material costs, depreciation, some salaries (e.g., salespeople’s), and other direct sales related expenses.8 Both Danone and Kraft present their expenses by function, which is sometimes referred to “cost of sales” method. One subtotal often shown in an income statement is gross

Flashcard 1478460312844

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Grouping expenses into Cost of Goods Sold is an example of grouping by [...].

Answer

grouping by function

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Parent (intermediate) annotation

Open it
An example of grouping by function would be grouping together expenses into a category such as cost of goods sold, which may include labour and material costs, depreciation, some salaries (e.g., salespeople’s), and other

Original toplevel document

Annotation 1478462672140

#cfa-level-1 #reading-25-understanding-income-statement

To present their expenses by function, which is sometimes referred to “cost of sales” method.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
n would be grouping together expenses into a category such as cost of goods sold, which may include labour and material costs, depreciation, some salaries (e.g., salespeople’s), and other direct sales related expenses.8 Both Danone and Kraft present their expenses by function, which is sometimes referred to “cost of sales” method. One subtotal often shown in an income statement is gross profit or gross margin (that is revenue less cost of sales). When an income statement shows a gross profit subt

Flashcard 1478464507148

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

To present expenses by function is sometimes referred to “[...]” method.

Answer

cost of sales

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Parent (intermediate) annotation

Open it
To present their expenses by function, which is sometimes referred to “cost of sales” method.

Original toplevel document

Annotation 1478467128588

#cfa-level-1 #reading-25-understanding-income-statement

One subtotal often shown in an income statement is gross profit or gross margin (that is revenue less cost of sales).

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
our and material costs, depreciation, some salaries (e.g., salespeople’s), and other direct sales related expenses.8 Both Danone and Kraft present their expenses by function, which is sometimes referred to “cost of sales” method. One subtotal often shown in an income statement is gross profit or gross margin (that is revenue less cost of sales). When an income statement shows a gross profit subtotal, it is said to use a multi-step format rather than a single-step format . The Kraft Foods income statement is an example of the

Flashcard 1478468177164

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

One subtotal often shown in an income statement is [...] (that is revenue less cost of sales).

Answer

gross profit or gross margin

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Parent (intermediate) annotation

Open it
One subtotal often shown in an income statement is gross profit or gross margin (that is revenue less cost of sales).

Original toplevel document

Annotation 1478469750028

#cfa-level-1 #reading-25-understanding-income-statement

When an income statement shows a gross profit subtotal, it is said to use a multi-step format rather than a single-step format .

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
Danone and Kraft present their expenses by function, which is sometimes referred to “cost of sales” method. One subtotal often shown in an income statement is gross profit or gross margin (that is revenue less cost of sales). When an income statement shows a gross profit subtotal, it is said to use a multi-step format rather than a single-step format . The Kraft Foods income statement is an example of the multi-step format, whereas the Groupe Danone income statement is in a single-step format. For manufacturing and merchandising compa

Flashcard 1478470798604

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

When an income statement shows a gross profit subtotal, it is said to use a [...] rather than a [...] .

Answer

multi-step format

single-step format

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Parent (intermediate) annotation

Open it
When an income statement shows a gross profit subtotal, it is said to use a multi-step format rather than a single-step format .

Original toplevel document

Annotation 1478474730764

#cfa-level-1 #reading-25-understanding-income-statement

For manufacturing and merchandising companies, gross profit is a relevant item

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
gross profit subtotal, it is said to use a multi-step format rather than a single-step format . The Kraft Foods income statement is an example of the multi-step format, whereas the Groupe Danone income statement is in a single-step format. For manufacturing and merchandising companies, gross profit is a relevant item and is calculated as revenue minus the cost of the goods that were sold. For service companies, gross profit is calculated as revenue minus the cost of services that were provided. In s

Flashcard 1478475779340

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

For [...] companies, gross profit is a relevant item

Answer

manufacturing and merchandising

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Parent (intermediate) annotation

Open it
For manufacturing and merchandising companies, gross profit is a relevant item

Original toplevel document

Annotation 1478477352204

#cfa-level-1 #reading-25-understanding-income-statement

In summary, gross profit is the amount of revenue available after subtracting the costs of delivering goods or services.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
and merchandising companies, gross profit is a relevant item and is calculated as revenue minus the cost of the goods that were sold. For service companies, gross profit is calculated as revenue minus the cost of services that were provided. In summary, gross profit is the amount of revenue available after subtracting the costs of delivering goods or services. Other expenses related to running the business are subtracted after gross profit. Another important subtotal which may be shown on the income statement is operating profit

Flashcard 1478478400780

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

In summary, gross profit is the amount of [...].

Answer

revenue available after subtracting the costs of delivering goods or services

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Parent (intermediate) annotation

Open it
In summary, gross profit is the amount of revenue available after subtracting the costs of delivering goods or services.

Original toplevel document

Annotation 1478480235788

#cfa-level-1 #reading-25-understanding-income-statement

Besides gross profit, another important subtotal which may be shown on the income statement is operating profit (or, synonymously, operating income)

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
rvices that were provided. In summary, gross profit is the amount of revenue available after subtracting the costs of delivering goods or services. Other expenses related to running the business are subtracted after gross profit. Another important subtotal which may be shown on the income statement is operating profit (or, synonymously, operating income). Operating profit results from deducting operating expenses such as selling, general, administrative, and research and development expenses from gross profit. Operating profit reflects

Flashcard 1478482070796

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Besides gross profit, another important subtotal which may be shown on the income statement is [...]

Answer

operating profit (or, synonymously, operating income)

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Parent (intermediate) annotation

Open it
Besides gross profit, another important subtotal which may be shown on the income statement is operating profit (or, synonymously, operating income)

Original toplevel document

Annotation 1478483905804

#cfa-level-1 #reading-25-understanding-income-statement

Operating profit results from deducting operating expenses such as selling, general, administrative, and research and development expenses from gross profit.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
oods or services. Other expenses related to running the business are subtracted after gross profit. Another important subtotal which may be shown on the income statement is operating profit (or, synonymously, operating income). Operating profit results from deducting operating expenses such as selling, general, administrative, and research and development expenses from gross profit. Operating profit reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense. For financial

Flashcard 1478484954380

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Operating profit results from deducting [...] expenses from [...]

Answer

operating expenses

gross profit.

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Operating profit results from deducting operating expenses such as selling, general, administrative, and research and development expenses from gross profit.

Original toplevel document

Flashcard 1478487313676

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Selling, general, administrative, and research and development are examples of [...]

Answer

Operating expenses

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Operating profit results from deducting operating expenses such as selling, general, administrative, and research and development expenses from gross profit.

Original toplevel document

Annotation 1478490721548

#cfa-level-1 #reading-25-understanding-income-statement

Operating profit reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
on the income statement is operating profit (or, synonymously, operating income). Operating profit results from deducting operating expenses such as selling, general, administrative, and research and development expenses from gross profit. Operating profit reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense. For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such

Flashcard 1478491770124

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

[...] reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense.

Answer

Operating profit

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Operating profit reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense.

Original toplevel document

Annotation 1478493342988

#cfa-level-1 #reading-25-understanding-income-statement

For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
dministrative, and research and development expenses from gross profit. Operating profit reflects a company’s profits on its usual business activities before deducting taxes, and for non-financial companies, before deducting interest expense. For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies. For some companies composed of a number of separate business segments, operating profit can be useful in evaluating the performance of the individual business segments, because interest

Flashcard 1478494391564

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

For [...] companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies.

Answer

financial

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For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies.</sp

Original toplevel document

Annotation 1478495964428

#cfa-level-1 #reading-25-understanding-income-statement

For some companies composed of a number of separate business segments, operating profit can be useful in evaluating the performance of the individual business segments, because interest and tax expenses may be more relevant at the level of the overall company rather than an individual segment level.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
companies, before deducting interest expense. For financial companies, interest expense would be included in operating expenses and subtracted in arriving at operating profit because it relates to the operating activities for such companies. For some companies composed of a number of separate business segments, operating profit can be useful in evaluating the performance of the individual business segments, because interest and tax expenses may be more relevant at the level of the overall company rather than an individual segment level. The specific calculations of gross profit and operating profit may vary by company, and a reader of financial statements can consult the notes to the statements to identify significant

Flashcard 1478497013004

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

For companies [...], operating profit is useful in evaluating the performance of the individual business segments.

Answer

with many separate business segments

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For some companies composed of a number of separate business segments, operating profit can be useful in evaluating the performance of the individual business segments, because interest and tax expenses may be more relevant at the level of the overall com

Original toplevel document

Annotation 1478499634444

#cfa-level-1 #reading-25-understanding-income-statement

The specific calculations of gross profit and operating profit may vary by company, and a reader of financial statements can consult the notes to the statements to identify significant variations across companies.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
ss segments, operating profit can be useful in evaluating the performance of the individual business segments, because interest and tax expenses may be more relevant at the level of the overall company rather than an individual segment level. The specific calculations of gross profit and operating profit may vary by company, and a reader of financial statements can consult the notes to the statements to identify significant variations across companies. Operating profit is sometimes referred to as EBIT (earnings before interest and taxes). However, operating profit and EBIT are not necessarily the same. Note that in both E

Flashcard 1478500683020

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

The specific calculations of gross profit and operating profit may vary by company, and a reader of financial statements can consult [...] to identify significant variations across companies.

Answer

the notes to the statements

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The specific calculations of gross profit and operating profit may vary by company, and a reader of financial statements can consult the notes to the statements to identify significant variations across companies.

Original toplevel document

Annotation 1478502255884

#cfa-level-1 #reading-25-understanding-income-statement

Operating profit is sometimes referred to as EBIT (earnings before interest and taxes).

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
segment level. The specific calculations of gross profit and operating profit may vary by company, and a reader of financial statements can consult the notes to the statements to identify significant variations across companies. Operating profit is sometimes referred to as EBIT (earnings before interest and taxes). However, operating profit and EBIT are not necessarily the same. Note that in both Exhibits 1 and 2, interest and taxes do not represent the only differences between earnings (net incom

Flashcard 1478503304460

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Operating profit is sometimes referred to as [...]

Answer

EBIT (earnings before interest and taxes).

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Operating profit is sometimes referred to as EBIT (earnings before interest and taxes).

Original toplevel document

Flashcard 1478504877324

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Are operating profit and EBIT necessarily the same?

Answer

Fuck no

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
y, and a reader of financial statements can consult the notes to the statements to identify significant variations across companies. Operating profit is sometimes referred to as EBIT (earnings before interest and taxes). However, operating profit and EBIT are not necessarily the same. Note that in both Exhibits 1 and 2, interest and taxes do not represent the only differences between earnings (net income, net earnings) and operating income. For example, both companie

Annotation 1478507236620

#cfa-level-1 #reading-25-understanding-income-statement

interest and taxes do not represent the only differences between earnings (net income, net earnings) and operating income.

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2. COMPONENTS AND FORMAT OF THE INCOME STATEMENT
significant variations across companies. Operating profit is sometimes referred to as EBIT (earnings before interest and taxes). However, operating profit and EBIT are not necessarily the same. Note that in both Exhibits 1 and 2, interest and taxes do not represent the only differences between earnings (net income, net earnings) and operating income. For example, both companies separately report some income from discontinued operations. Exhibit 3 shows an excerpt from the income statement of CRA International (NASDAQ GS

Annotation 1478508547340

#cfa-level-1 #reading-25-understanding-income-statement

Sometimes interest and taxes do not represent the only differences between net income and operating income. For example, some companies separately report some income from discontinued operations.

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Flashcard 1478510382348

Tags

#cfa-level-1 #reading-25-understanding-income-statement

Question

Sometimes [...] do not represent the only differences between net income and operating income.

Answer

interest and taxes

Some companies separately report some income from discontinued operations.

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Sometimes interest and taxes do not represent the only differences between net income and operating income . For example, some companies separately report some income from discontinued operations.<

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Annotation 1478534237452

#biochem #biology #cell

glycolysis—from the Greek glukus, “sweet,” and lusis, “rupture.”

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Annotation 1478535810316

#biochem #biology #cell

During glycolysis, a glucose molecule with six carbon atoms is converted into two molecules of pyruvate, each of which contains three carbon atoms. For each glucose molecule, two molecules of ATP are hydro- lyzed to provide energy to drive the early steps, but four molecules of ATP are pro- duced in the later steps. At the end of glycolysis, there is consequently a net gain of two molecules of ATP for each glucose molecule broken down. Two molecules of the activated carrier NADH are also produced

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Annotation 1478537383180

#biochem #biology #cell

pyruvate formed by glycolysis is rapidly transported into the mitochondria, where it is converted into CO 2 plus acetyl CoA, whose acetyl group is then completely oxidized to CO 2 and H 2 O

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Annotation 1478538956044

#biochem #biology #cell

Certain animal tissues, such as skeletal muscle, can also continue to function when molecular oxygen is limited. In these anaerobic conditions, the pyruvate and the NADH electrons stay in the cytosol. The pyruvate is converted into products excreted from the cell—for example, into ethanol and CO 2 in the yeasts used in brewing and breadmaking, or into lactate in muscle. In this process, the NADH gives up its electrons and is converted back into NAD + . This regener- ation of NAD + is required to maintain the reactions of glycolysis

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Annotation 1478540528908

#biochem #biology #cell

The piecing together of the complete glycolytic pathway in the 1930s was a major triumph of biochemistry

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Annotation 1478542101772

#biochem #biology #cell

Studies of the commercially important fermentations carried out by yeasts inspired much of early biochemistry. Work in the nineteenth century led in 1896 to the then startling recognition that these processes could be studied outside living organisms, in cell extracts.

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Annotation 1478543674636

#biochem #biology #cell

Two central reactions in glycolysis (steps 6 and 7) convert the three-carbon sugar inter- mediate glyceraldehyde 3-phosphate (an aldehyde) into 3-phosphoglycerate (a carboxylic acid; see Panel 2–8, pp. 104–105), thus oxidizing an aldehyde group to a carboxylic acid group.

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Annotation 1478545247500

#biochem #biology #cell

The overall reaction releases enough free energy to convert a molecule of ADP to ATP and to transfer two electrons (and a proton) from the aldehyde to NAD + to form NADH, while still liberating enough heat to the envi- ronment to make the overall reaction energetically favorable (∆G° for the overall reaction is –12.5 kJ/mole)

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Annotation 1478546820364

#biochem #biology #cell

In step 6, the enzyme glyceraldehyde 3-phosphate dehydrogenase couples the energetically favorable oxidation of an aldehyde to the energetically unfavorable formation of a high-energy phosphate bond. At the same time, it enables energy to be stored in NADH. The formation of the high-energy phosphate bond is driven by the oxidation reaction, and the enzyme thereby acts like the “paddle wheel” coupler

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Annotation 1478548393228

#biochem #biology #cell

Note that the C–H bond oxi- dation energy in step 6 drives the formation of both NADH and a high-energy phosphate bond. The breakage of the high-energy bond then drives ATP forma- tion

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Annotation 1478549966092

#biochem #biology #cell

ATP can be formed readily from ADP when a reaction intermediate is formed with a phosphate bond of higher energy than the terminal phosphate bond in ATP.

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Annotation 1478551538956

#biochem #biology #cell

To compensate for long periods of fasting, animals store fatty acids as fat droplets composed of water-insoluble triacylglycerols (also called triglycerides).

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Annotation 1478553111820

#biochem #biology #cell

When cells need more ATP than they can generate from the food molecules taken in from the bloodstream, they break down glycogen in a reaction that produces glucose 1-phosphate, which is rapidly converted to glucose 6-phosphate for gly- colysis

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Annotation 1478554684684

#biochem #biology #cell

he oxidation of a gram of fat releases about twice as much energy as the oxidation of a gram of glycogen

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Annotation 1478556257548

#biochem #biology #cell

Moreover, glycogen differs from fat in binding a great deal of water, producing a sixfold difference in the actual mass of glycogen required to store the same amount of energy as fat.

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Annotation 1478557830412

#biochem #biology #cell

If our main fuel reservoir had to be carried as glycogen instead of fat, body weight would increase by an average of about 60 pounds

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Annotation 1478559403276

#biochem #biology #cell

The fats in plants are triacyl-glyc- erols (triglycerides), just like the fats in animals, and differ only in the types of fatty acids that predominate

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Annotation 1478560976140

#deeplearning #neuralnetworks

The McCullo ch-Pitts Neuron ( , ) w as an early mo del McCullo ch and Pitts 1943 of brain function.

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Annotation 1478562549004

#deeplearning #neuralnetworks

This linear mo del (Mucollach-Piits Neuron model) could recognize tw o diﬀeren t categories of inputs b y testing whether f ( x w , ) is p ositiv e or negative. Of course, for the mo del to corresp ond to the desired deﬁnition of the categories, the w eigh ts needed to b e set correctly . These w eigh ts could b e set by the human op erator.

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Annotation 1478564908300

#deeplearning #neuralnetworks

The adaptiv e linear elemen t (AD ALINE), whic h dates from ab out the same time, simply returned the v alue of f ( x ) itself to predict a real num ber ( Widrow and Hoﬀ 1960 , ), and could also learn to predict these num bers from data.

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Annotation 1478568054028

#deeplearning #neuralnetworks

The training algorithm used to adapt the weigh ts of the ADALINE w as a sp ecial case of an algorithm called sto c hastic gradien t descen t . Sligh tly mo diﬁed versions of the sto c hastic gradien t descent algorithm remain the dominan t training algorithms for deep learning mo dels to da y .

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Annotation 1478569626892

#deeplearning #neuralnetworks

Mo dels based on the f ( x w , ) used b y the p erceptron and ADALINE are called linear mo dels . These mo dels remain some of the most widely used machine learning mo dels, though in man y cases they are tr aine d in diﬀerent wa ys than the original mo dels were trained

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Annotation 1478571199756

#deeplearning #neuralnetworks

Linear mo dels hav e many limitations. Most famously , they cannot learn the X OR function,

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Annotation 1478572772620

#deeplearning #neuralnetworks

m uc h of the mammalian brain might use a single algorithm to solve most of the diﬀeren t tasks that the brain solv es

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Annotation 1478574345484

#deeplearning #neuralnetworks

The Neo cognitron ( F ukushima 1980 , ) in tro duced a p ow erful mo del architecture for pro cessing images that was inspired b y the structure of the mammalian visual system and later b ecame the basis for the mo dern conv olutional netw ork

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Annotation 1478575918348

#deeplearning #neuralnetworks

Most neural net w orks to da y are based on a model neuron called 9.10 the rectiﬁed linear unit .

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Annotation 1478577491212

#deeplearning #neuralnetworks

The connectionists b egan to study mo dels of cognition that could actually b e grounded in neural implemen tations ( T ouretzky and Minton 1985 , ), reviving many ideas dating back to the work of psychologist Donald Hebb in the 1940s

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Annotation 1478579064076

#deeplearning #neuralnetworks

The central idea in connectionism is that a large num ber of simple computational units can ac hiev e in telligen t behavior when net w ork ed together.

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Annotation 1478580636940

#deeplearning #neuralnetworks

distributed represen tation ( Hin ton et al. , 1986 ). This is the idea that each input to a system should b e represen ted b y man y features, and each feature should b e inv olved in the representation of many p ossible inputs.

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Annotation 1478582209804

#deeplearning #neuralnetworks

back-propagation algorithm ( Rumelhart et al. , ; , ). This algorithm has w axed and w aned in p opularity 1986a LeCun 1987 but as of this writing is currently the dominant approach to training deep mo dels.

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Annotation 1478583782668

#deeplearning #neuralnetworks

Ho c hreiter and Sc hmidh ub er 1997 ( ) in tro duced the long short-term memory or LSTM net w ork to resolve some of these diﬃculties. T o da y , the LSTM is widely used for many sequence mo deling tasks, including many natural language pro cessing tasks at Go ogle

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Annotation 1478586666252

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.

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Letter Of Credit Definition | Investopedia
What is a 'Letter Of Credit' A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. BREAKING DOWN 'Letter Of Credit' Because a letter of credit is typically a negotiable instrument, the issuing bank pays the beneficiary or any bank

Annotation 1478595841292

#deeplearning #neuralnetworks

Biological neurons are not esp ecially densely connected. As seen in ﬁgure , 1.10 our mac hine learning mo dels hav e had a num ber of connections p er neuron that w as within an order of magnitude of even mammalian brains for decades

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Annotation 1478597414156

Banks typically require a pledge of securities or cash as collateral for issuing a letter of credit.

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Letter Of Credit Definition | Investopedia
bank pays the beneficiary or any bank nominated by the beneficiary. If a letter of credit is transferrable, the beneficiary may assign another entity, such as a corporate parent or a third party, the right to draw. Funding a Letter of Credit Banks typically require a pledge of securities or cash as collateral for issuing a letter of credit. Banks also collect a fee for service, typically a percentage of the size of the letter of credit. The International Chamber of Commerce Uniform Customs and Practice for Documentary Cred

Annotation 1478599249164

Banks also collect a fee for service, typically a percentage of the size of the letter of credit.

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Letter Of Credit Definition | Investopedia
rrable, the beneficiary may assign another entity, such as a corporate parent or a third party, the right to draw. Funding a Letter of Credit Banks typically require a pledge of securities or cash as collateral for issuing a letter of credit. Banks also collect a fee for service, typically a percentage of the size of the letter of credit. The International Chamber of Commerce Uniform Customs and Practice for Documentary Credits oversees letters of credit used in international transactions. Example of a Letter of Credit C

Annotation 1478601084172

#deeplearning #neuralnetworks

In terms of the total n um ber of neurons, neural netw orks hav e b een astonishingly small until quite recently , as shown in ﬁgure . Since the introduction of hidden 1.11 units, artiﬁcial neural net w orks hav e doubled in size roughly every 2.4 years.

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Annotation 1478603967756

#deeplearning #neuralnetworks

Unless new technologies allo w faster scaling, artiﬁcial neural netw orks will not hav e the same n um b er of neurons as the human brain un til at least the 2050s

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Annotation 1478608162060

#deeplearning #neuralnetworks

Ev en to day’s netw orks, whic h we consider quite large from a computational systems p oint of view, are smaller than the nervous system of even relativ ely primitiv e v ertebrate animals like frogs

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Annotation 1478616550668

#deeplearning #neuralnetworks

neural T uring mac hines ( Gra v es 2014a et al. , ) that learn to read from memory cells and write arbitrary conten t to memory cells. Suc h neural net w orks can learn simple programs from examples of desired b ehavior. F or example, they can learn to sort lists of num b ers giv en examples of scrambled and sorted sequences. This self-programming technology is in its infancy , but in the future could in principle b e applied to nearly any task

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Annotation 1478618123532

#deeplearning #neuralnetworks

In the con text of reinforcemen t learning, an autonomous agen t must learn to p erform a task b y trial and error, without any guidance from the human op erator.

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Annotation 1478619696396

#deeplearning #neuralnetworks

Next, w e describ e the fundamen tal goals of machine learning. W e describe how to accomplish these goals b y sp ecifying a mo del that represen ts certain b eliefs, designing a cost function that measures how well those beliefs corresp ond with realit y and using a training algorithm to minimize that cost function.

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