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Flashcard 1436164427020

Tags
#costs #finance #investopedia
Question

Explicit costs are the only costs necessary to calculate [...] profit.

Answer

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Examples of Explicit Costs Net income of a business reflects residual income remaining after all explicit costs have been paid. Explicit costs are the only costs necessary to calculate accounting profit. Expenses relating to advertising, supplies, utilities, inventory and equipment actually purchased are examples of explicit costs. Although the depreciation of an asset is not an

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Explicit Cost Definition | Investopedia
An explicit cost is an expense that has occurred and has a clearly defined dollar amount. These expenses are incurred during business operations and are actual out-of-pocket cash outlays. The objective dollar amounts are subject to reporting. <span>Examples of Explicit Costs Net income of a business reflects residual income remaining after all explicit costs have been paid. Explicit costs are the only costs necessary to calculate accounting profit. Expenses relating to advertising, supplies, utilities, inventory and equipment actually purchased are examples of explicit costs. Although the depreciation of an asset is not an activity that can be tangibly traced, depreciation expense is an explicit cost because it relates to the cost of the underlying asset that the company owns. Explicit Costs vs. Implicit Costs Explicit costs arise based on what has actually been purchased as opposed to implicit costs that arise based on what has actually been given up other t






Flashcard 1439176723724

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

Discounted Payback Period is similar to the regular payback method except that [...].

Answer
it discounts cash flows at the project's cost of capital

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Discounted Payback Period This is similar to the regular payback method except that it discounts cash flows at the project's cost of capital. It considers the time value of money, but it ignores cash flows beyond the payback period. Again, assume the cost of capital for the firm is 10%: Discounted PaybackA

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Subject 3. Investment Decision Criteria
y to recover the initial investment, not how much money you can make during the life of the project. It does not consider the time value of money. Therefore, the cost of capital is not reflected in the cash flows or calculations. <span>Discounted Payback Period This is similar to the regular payback method except that it discounts cash flows at the project's cost of capital. It considers the time value of money, but it ignores cash flows beyond the payback period. Again, assume the cost of capital for the firm is 10%: Discounted PaybackA = 2 + (1000 - 682 - 289)/113 = 2.26 years Discounted PaybackB = 3 + (1000 - 91 - 207 - 338)/512 = 3.71 years The payback provides an indication of a project's risk and liquidity because it shows how long the invested capital will be tied up in a project and "at risk." The shorter the payback period, the greater the project's liquidity, the lower the risk, and the better the project. The payback is often used as one indicator of a project's risk. Average Accounting Rate of Return (not required) This is a very simple rate of return: Its only advantage is that






Flashcard 1446861999372

Tags
#cfa-level-1 #fra-introduction #reading-22-financial-statement-analysis-intro #study-session-7
Question
Is Cash flow a complete measure of performance?
Answer
no

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Cash flow in any given period is not a complete measure of performance for that period.

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2. SCOPE OF FINANCIAL STATEMENT ANALYSIS
d to earn that income. Overall, profit (or loss) equals income minus expenses, and its recognition is mostly independent from when cash is received or paid. Example 1 illustrates the distinction between profit and cash flow. <span>EXAMPLE 1 Profit versus Cash Flow Sennett Designs (SD) sells furniture on a retail basis. SD began operations during December 2009 and sold furniture for €250,000 in cash. The furniture sold by SD was purchased on credit for €150,000 and delivered by the supplier during December. The credit terms granted by the supplier required SD to pay the €150,000 in January for the furniture it received during December. In addition to the purchase and sale of furniture, in December, SD paid €20,000 in cash for rent and salaries. How much is SD’s profit for December 2009 if no other transactions occurred? How much is SD’s cash flow for December 2009? If SD purchases and sells exactly the same amount in January 2010 as it did in December and under the same terms (receiving cash for the sales and making purchases on credit that will be due in February), how much will the company’s profit and cash flow be for the month of January? Solution to 1: SD’s profit for December 2009 is the excess of the sales price (€250,000) over the cost of the goods that were sold (€150,000) and rent and salaries (€20,000), or €80,000. Solution to 2: The December 2009 cash flow is €230,000, the amount of cash received from the customer (€250,000) less the cash paid for rent and salaries (€20,000). Solution to 3: SD’s profit for January 2010 will be identical to its profit in December: €80,000, calculated as the sales price (€250,000) minus the cost of the goods that were sold (€150,000) and minus rent and salaries (€20,000). SD’s cash flow in January 2010 will also equal €80,000, calculated as the amount of cash received from the customer (€250,000) minus the cash paid for rent and salaries (€20,000) and minus the €150,000 that SD owes for the goods it had purchased on credit in the prior month. Although profitability is important, so is a company’s ability to generate positive cash flow. Cash flow is important because, ultimately, the company needs cash to pay employees, suppliers, and others in order to continue as a going concern. A company that generates positive cash flow from operations has more flexibility in funding needed for investments and taking advantage of attractive business opportunities than an otherwise comparable company without positive operating cash flow. Additionally, a company needs cash to pay returns (interest and dividends) to providers of debt and equity capital. Therefore, the expected magnitude of future cash flows is important in valuing corporate securities and in determining the company’s ability to meet its obligations. The ability to meet short-term obligations is generally referred to as liquidity , and the ability to meet long-term obligations is generally referred to as solvency . Cash flow in any given period is not, however, a complete measure of performance for that period because, as shown in Example 1, a company may be obligated to make future cash payments as a result of a transaction that generates positive cash flow in the current period. Profits may provide useful information about cash flows, past and future. If the transaction of Example 1 were repeated month after month, the long-term average monthly cas






Flashcard 1473951960332

Tags
#cfa-level-1 #reading-22-financial-statement-analysis-intro
Question
The [...] disclose the basis of preparationfor the financial statements.
Answer
notes

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The notes disclose the basis of preparation for the financial statements.

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3.1.5. Financial Notes and Supplementary Schedules
ete set of financial statements. The notes provide information that is essential to understanding the information provided in the primary statements. Volkswagen’s 2009 financial statements, for example, include 91 pages of notes. <span>The notes disclose the basis of preparation for the financial statements. For example, Volkswagen discloses in its first note that its fiscal year corresponds to the calendar year, that its financial statements are prepared in accordance with IFRS as adopted






Flashcard 1474067303692

Tags
#cfa-level-1 #reading-22-financial-statement-analysis-intro
Question
Inclusion of a management report is recommended by the [...]
Answer
International Organization of Securities Commissions

and frequently required by the US SEC or the UK FRC.

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Inclusion of a management report is recommended by the International Organization of Securities Commissions and frequently required by regulatory authorities, such as the US Securities and Exchange Commission (SEC) or the UK Financial Reporting Council (FRC).

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3.1.6. Management Commentary or Management’s Discussion and Analysis
he nature of the business, past results, and future outlook. This section is referred to by a variety of names, including management report(ing), management commentary, operating and financial review, and management’s discussion and analysis. <span>Inclusion of a management report is recommended by the International Organization of Securities Commissions and frequently required by regulatory authorities, such as the US Securities and Exchange Commission (SEC) or the UK Financial Reporting Council (FRC). In Germany, management reporting has been required since 1931 and is audited. The discussion by management is arguably one of the most useful parts of a company’s annual report besides






Flashcard 1479139265804

Tags
#daniel-goleman #emotional-brain #emotional-iq #our-two-minds #what-are-emotions-for #when-passions-overwhelm-reasons
Question
Emotional thinking beats rational thinking because of eons of guiding our instantaneous response when [...]
Answer
pausing to think could cost us our lives

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Emotional thinking beats rational thinking because of eons of guiding our instantaneous response when pausing to think could cost us our lives

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Flashcard 1598469311756

Tags
#cfa-level-1 #financial-reporting-and-analysis #non-recurring-non-operating-items #understanding-income-statement
Question
Why is net income not the best indicator of future income?

[...]
Answer
Because it includes non-recurring and non operating items

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Why is net income is not the best indicator of future income? Because it includes non-recurring and non operating items

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Subject 6. Non-Recurring Items and Non-Operating Items
<head>The goal of analyzing an income statement is to derive an effective indicator to predict future earnings and cash flows. Net income includes the impact of non-recurring items, which are transitory or random in nature. Therefore, net income is not the best indicator of future income. Recurring pre-tax income from continuing operations represents the company's sustainable income and therefore should be the primary focus of analysis. Segregating the resul






Flashcard 1603015150860

Tags
#analyst-notes #cfa-level-1 #financial-reporting-and-analysis #reading-26-understanding-balance-sheets
Question

issuance of bonds is a type of [...]

Answer
long term liabilities

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Subject 1. Components and Format of the Balance Sheet
expected to be liquidated within the normal operating cycle but instead at some date beyond that time. Bonds payable, notes payable, deferred income taxes, lease obligations, and pension obligations are the most common long-term liabilities. <span>Generally they are of three types: Obligations arising from specific financing situations, such as issuance of bonds, long-term lease obligations, and long-term notes payable. Obligations arising from the ordinary operations of the enterprise, such as pension obligations and deferred income tax liabilities. Obligations that are dependent upon the occurrence o






Flashcard 1603054210316

Tags
#cfa-level-1 #financial-reporting-and-analysis #reading-26-understanding-balance-sheets
Question
What kind of cash should be excluded from the current asset section?
Answer
Cash restricted to use in something other than current obligations or operations

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Subject 2. Measurement Bases of Assets and Liabilities
how the values relate to economic reality and to each other. Current Assets Current assets are presented in the balance sheet in order of liquidity. The five major items found in the current assets section are: <span>Cash. Valued at its stated value. Cash restricted for purpose other than payment of current obligations or for use in current operations should be excluded from the current asset section. Marketable securities. Valued at cost or lower of cost and market value. Accounts receivables. Amounts owed to the company by its customers for goods and services delivered. Valued at t






Flashcard 1611247783180

Question
[...] The amount of money which has been invested in the business by the owners.
Answer
Contributed capital or paid in capital

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Equity
Equity is a residual value of assets which the owner has claim to after satisfying other claims on the assets (liabilities). There are five potential components that comprise the owner's equity section of the balance sheet: <span>Contributed capital. The amount of money which has been invested in the business by the owners. This includes preferred stocks and common stocks. Common stock is recorded at par value with the remaining amount invested contained in additional paid-in capital.






Annotation 1612603329804

I will finally suggest that we might want to think less of teaching ‘culture’ than of developing in our students an intercultural competence steeped in a deep understanding of their historicity and subjectivity as language learners.
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Flashcard 1614984383756

Tags
#excel
Question
Para que sirve la función redondeo?
Answer
Redondea a los digitos que quieras.

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Flashcard 1616136506636

Tags
#cfa #cfa-level-1 #financial-reporting-and-analysis #reading-24-understanding-income-statements
Question
What is a Pension Fund in the financial statement?
Answer
A long-term liability that is off-balance sheet

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Comprehensive income
sition of comprehensive income. It begins with net income and then includes those items affecting stockholders' equity that do not flow through the income statement. For 3M, these items include: Cumulative translation adjustment. <span>Minimum pension liability adjustment. Unrealized gains (losses) on available-for-sale investments. Unrealized gains (losses) on derivative investments. FASB has taken the position that income for a period shoul






Flashcard 1616149351692

Tags
#analyst-notes #cfa-level-1 #financial-reporting-and-analysis #reading-26-understanding-balance-sheets
Question

  • long-term lease obligations, and long-term notes payable are a kind of [...]
Answer
Long term liability

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Subject 1. Components and Format of the Balance Sheet
expected to be liquidated within the normal operating cycle but instead at some date beyond that time. Bonds payable, notes payable, deferred income taxes, lease obligations, and pension obligations are the most common long-term liabilities. <span>Generally they are of three types: Obligations arising from specific financing situations, such as issuance of bonds, long-term lease obligations, and long-term notes payable. Obligations arising from the ordinary operations of the enterprise, such as pension obligations and deferred income tax liabilities. Obligations that are dependent upon the occurrence o






Annotation 1616154856716

I think it is very important to make the link between the muf.zdathun and the Arabic modernist project, to bring Abbasid poets such as Abu Tammiim, Ibn al-R1lmi, al-Bul).turi, and certainly the later al-Mutanabbi into the discussion of Arabic poetry and its directions today.
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Flashcard 1616158788876

Question
When Mohammed connected his mission with the teachings of Christians and Jews and when he revealed that the great Arab sanctuary of the Ka'ba in Mecca had been consecrated by Abraham, how did hechange how Arabs thought of themselves?
Answer
He gave greater depth to Arab historical consciousness.

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When Mohammed connected his mission with the teachings of Christians and Jews and when he revealed that the great Arab sanctuary of the Ka c ba in Mecca had been conse crated by Abraham, he gave greater depth to Arab historical consciousness,

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Flashcard 1616169012492

Question
(If al-Ba'ıth really was in al-Basra), after Jarır moved there, why might have al-Ba'ıth decided to live, or at least to visit, the city?
Answer
To continue participating in the poetic contest against his two rivals.

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If al-Ba , ¯ıth really was in al-Bas . ra, then it is possible that after Jar¯ır moved there, al-Ba , ¯ıth also decided to live, or at least to visit, the city in order to continue participating in the poetic contest against his two rivals.

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