Edited, memorised or added to reading list

on 26-Jun-2017 (Mon)

Do you want BuboFlash to help you learning these things? Click here to log in or create user.

Flashcard 1425512992012

Tags
#cfa-level-1 #economics #economics-in-a-global-context #los #reading-20-international-trade-and-capital-flows
Question
[...] measures the market value of all final goods and services produced by factors of production supplied by residents of a country, regardless of whether such production takes place within the country or outside of the country.
Answer
Gross national product (GNP)

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Gross national product (GNP) measures the market value of all final goods and services produced by factors of production (such as labor and capital) supplied by residents of a country, regardless of whether such p

Original toplevel document

2.1. Basic Terminology
ic product (GDP) measures the market value of all final goods and services produced by factors of production (such as labor and capital) located within a country/economy during a given period of time, generally a year or a quarter. <span>Gross national product (GNP), however, measures the market value of all final goods and services produced by factors of production (such as labor and capital) supplied by residents of a country, regardless of whether such production takes place within the country or outside of the country. The difference between a country’s GDP and its GNP is that GDP includes, and GNP excludes, the production of goods and services by foreigners within that country, whereas GNP







Flashcard 1442889469196

Tags
#2-2-comparison-of-profit-measures #cfa #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Question
Failing to earn [...] over the long run has a debilitating impact on the firm’s ability to access capital.
Answer
normal profits

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise.

Original toplevel document

2. OBJECTIVES OF THE FIRM
quence, the spot price has dramatically increased by 44.3 percent. Economic rent has resulted from this market relationship of a relatively fixed supply of gold and a rising demand for it. <span>2.2. Comparison of Profit Measures All three types of profit are interconnected because, according to Equation 4, accounting profit is the summation of normal and economic profit. In the short run, the normal profit rate is relatively stable, which makes accounting and economic profit the two variable terms in the profit equation. Over the longer term, all three types of profit are variable, where the normal profit rate can change according to investment returns across firms in the industry. Normal profit is necessary to stay in business in the long run; positive economic profit is not. A business can survive indefinitely by just making the normal profit return for investors. Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise. Consequentially, the market value of equity and shareholders’ wealth deteriorates whenever risk to achieving normal profit materializes and the firm fails to reward investors for their risk exposure and for the opportunity cost of their equity capital. To summarize, the ultimate goal of analyzing the different types of profit is to determine how their relationships to one another influence the firm’s market value of equity. Exhibit 2 compares accounting, normal, and economic profits in terms of how a firm’s market value of equity is impacted by the relationships among the three types of profit. Exhibit 2. Relationship of Accounting, Normal, and Economic Profit to Equity Value Relationship between Accounting Profit and Normal Profit Economic Profit Firm’s Market Value of Equity Accounting profit > Normal profit Economic profit > 0 and firm is able to protect economic profit over the long run Positive effect Accounting profit = Normal profit Economic profit = 0 No effect Accounting profit < Normal profit Economic profit < 0 implies economic loss Negative effect <span><body><html>







Flashcard 1447484067084

Tags
#7-important-definitions #language-and-reality #sister-miriam-joseph #trivium
Question
2 [...] is essence viewed as the source of activity.
Answer
Nature

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
2 Nature is essence viewed as the source of activity.

Original toplevel document (pdf)

cannot see any pdfs







Flashcard 1447517359372

Tags
#7-important-definitions #language-and-reality #sister-miriam-joseph #trivium
Question
7 An [...] is the indirect intellectual apprehension of an individual.
Answer
empirical concept

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
7 An empirical concept is the indirect intellectual apprehension of an individual. The intellect can know individual objects only indirectly in the phantasms because individuals are material, with one excepti

Original toplevel document (pdf)

cannot see any pdfs







Flashcard 1447732579596

Tags
#logic-and-psychologic-dimensions-of-language #sister-miriam-joseph #trivium
Question
Language has [...] and psychological meanings.
Answer
logical

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Language has logical and psychological meanings which may be illustrated through a closer look at the words house and home.

Original toplevel document (pdf)

cannot see any pdfs







Flashcard 1453664374028

Tags
#conversation-tactics
Question



If you [...] and [...] in your conversation, for the person you're talking to, the conversation never teeters out.
Answer
identify a high point, and you kept recycling that high point

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
ou're talking to, the conversation never teeters out. This leads them to perceive you as a very clever, interesting, and intelligent person to talk to. You end up making a very favorable impression to them. In reality, what you just did was <span>identify a high point, and you kept recycling that high point in your conversation.<span><body><html>

Original toplevel document (pdf)

cannot see any pdfs







Flashcard 1464680975628

Tags
#conversation-tactics
Question
Rehearse only your conversational [...]
Answer
bookends.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Chapter 8. Rehearse only your conversational bookends.

Original toplevel document (pdf)

cannot see any pdfs







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 [...].

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

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

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. <span>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 1602920516876

Tags
#cfa #cfa-level-1 #financial-reporting-and-analysis #reading-24-understanding-income-statements
Question
Comprehensive income may be reported on [...] or [...]
Answer
an income statement

separate statement.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Comprehensive income
lity 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 should be all-inclusive comprehensive income. <span>Comprehensive income may be reported on an income statement or separate statement, but is usually reported on a statement of stockholders' equity. <span><body><html>







Flashcard 1602998373644

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

A balance sheet component.

These lack physical substance and usually have a high degree of uncertainty concerning their future benefits.

Answer
Intangible Assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 1. Components and Format of the Balance Sheet
operty, Plant, and Equipment These are properties of a durable nature used in the regular operations of the business. With the exception of land, most assets are either depreciable (such as a building) or consumable. <span>Intangible Assets These lack physical substance and usually have a high degree of uncertainty concerning their future benefits. They include patents, copyrights, franchises, goodwill, trademarks, trade names, secret processes, and organization costs. Other Assets These vary widely in practice. Examples include deferred charges (long-term pre-paid expenses), non-current receivables, intangible assets, assets







Flashcard 1603154611468

Tags
#cfa-level-1 #financial-reporting-and-analysis #reading-26-understanding-balance-sheets
Question
At what cost are identifiable intangible assets generally recorded
Answer
only when purchased (at acquisition costs)

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 2. Measurement Bases of Assets and Liabilities
ion. See Reading 29 [Long-Lived Assets] for details. Intangible Assets Intangible assets are long-term assets that have no physical substance but have a value based on rights or privileges that belong to their owner. <span>Generally, identifiable intangible assets are recorded only when purchased (at acquisition costs). The cost of internally developed identifiable intangible assets is typically expensed when incurred. For example, R&D costs are not in themselves intangible assets. They should be







Flashcard 1615949860108

Question
The [...] discloses operating cash inflows by source and operating cash outflows by use in the operating activities section of the cash flow statement.
Answer
direct method

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 2. Preparing the Cash Flow Statement
perating activities. There are two methods of converting the income statement from an accrual basis to a cash basis. Companies can use either the direct or the indirect method for reporting their operating cash flow. <span>The direct method discloses operating cash inflows by source (e.g., cash received from customers, cash received from investment income) and operating cash outflows by use (e.g., cash paid to suppliers, cash paid for interest) in the operating activities section of the cash flow statement. It adjusts each item in the income statement to its cash equivalent. It shows operating cash receipts and payments. More cash flow information can be obtained and it is mor







Flashcard 1615962443020

Question
The [...] method reconciles net income to net cash flow from operating activities.
Answer
indirect method

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 2. Preparing the Cash Flow Statement
; It adjusts each item in the income statement to its cash equivalent. It shows operating cash receipts and payments. More cash flow information can be obtained and it is more easily understood by the average reader. <span>The indirect method reconciles net income to net cash flow from operating activities by adjusting net income for all non-cash items and the net changes in the operating working capital accounts. It shows why net income and operating cash flows differ. It is used by most companies. The direct and indirect methods are alternative formats for reporti







Flashcard 1619910855948

Tags
#fucked-up-questions
Question
In which statement should an increase in prepaid expenses be added to calculate the cash payments?
Answer
The income statement

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

In calculating the cash payments for other operating expenses, which of the following items must a company add to the other operating expenses reported on the income statement?
An increase in prepaid expenses must be added to the other operating expenses reported on the income statement to calculate the cash payments for other operating expenses. An increase in prepaid expenses represents an outflow of cash that is not yet reported on the income statement as an expense.







Flashcard 1619926846732

Tags
#percentage-of-completion-method-steps
Question
Step 1 percentage of completion
Answer
Current Cost= El costo acumulado en ese año lo divides entre el costo estimado total y lo multiplicas por 100. Ese porcentaje lo multiplicas por el costo estimado

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Percentage of completion steps to report
Step 1: Current Cost= Divides el costo acumulado en ese año y lo divides entre el costo estimado total y lo multiplicas por 100. Ese porcentaje lo multiplicas por el costo estimado Step 2: Current Revenue: divides el costo acumulado en ese año, lo divides entre el costo estimado total y lo multiplicas por el precio del contrato. Step 3:Prof







Flashcard 1620805553420

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name which financial statement element does the account belong to:

Accounts receivable.
Answer
Assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620815514892

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
To which Financial Statement Element does the account belong?

Intangible assets (patents, trademarks, licenses, copyright, goodwill)
Answer
Assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620823641356

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name if the account is a Assets, Liability, Equity, Revenue or Expense

Current and deferred tax assets
Answer
Assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620826262796

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name if the account is a Assets, Liability, Equity, Revenue or Expense

Accounts payable.
Answer
Liabilities

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620828622092

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name the financial statement element for the account:

Provisions or accrued liabilities
Answer
Liabilities

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620853525772

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name if the account is a Assets, Liability, Equity, Revenue or Expense

Revenue
Answer
Revenue

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620856671500

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name if the account is a Assets, Liability, Equity, Revenue or Expense

Revenue
Answer
Revenue

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1620858768652

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Name if the account is a Assets, Liability, Equity, Revenue or Expense

Revenue
Answer
Revenue

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment propert

Original toplevel document

3.1. Financial Statement Elements and Accounts
ounting periods), and sales returns and allowances (an offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items). <span>Exhibit 2. Common Accounts Assets Cash and cash equivalents Accounts receivable, trade receivables Prepaid expenses Inventory Property, plant, and equipment Investment property Intangible assets (patents, trademarks, licenses, copyright, goodwill) Financial assets, trading securities, investment securities Investments accounted for by the equity method Current and deferred tax assets [for banks, Loans (receivable)] Liabilities Accounts payable, trade payables Provisions or accrued liabilities Financial liabilities Current and deferred tax liabilities Reserves Unearned revenue Debt payable Bonds (payable) [for banks, Deposits] Owners’ Equity Capital, such as common stock par value Additional paid-in capital Retained earnings Other comprehensive income Minority interest Revenue Revenue, sales Gains Investment income (e.g., interest and dividends) Expense Cost of goods sold Selling, general, and administrative expenses “SG&A” (e.g., rent, utilities, salaries, advertising) Depreciation and amortization Interest expense Tax expense Losses For presentation purposes, assets are sometimes categorized as “current” or “non-current.” For example, Tesco (a large European retailer) prese







Flashcard 1621032045836

Tags
#cashflow-statement
Question
[...] is intended to measure the cash available to a company after making all required cash outlays.
Answer
Free Cash Flow (FCF)

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
CFO does not include charges for the use of long-lived assets. Recall that depreciation is added back to net income in arriving at CFO. CFO does not include cash outlays for replacing old equipment. <span>Free Cash Flow (FCF) is intended to measure the cash available to a company for discretionary uses after making all required cash outlays. It accounts for capital expenditures and dividend payments, which are essential to the ongoing nature of the business. The basic definition is cash from operations l







Flashcard 1621034405132

Tags
#cashflow-statement
Question
FCF accounts for [...] and dividend payments, which are essential to the ongoing nature of the business.
Answer
capital expenditures

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
CFO. CFO does not include cash outlays for replacing old equipment. Free Cash Flow (FCF) is intended to measure the cash available to a company for discretionary uses after making all required cash outlays. <span>It accounts for capital expenditures and dividend payments, which are essential to the ongoing nature of the business. The basic definition is cash from operations less the amount of capital expenditures required to maintain the company's present productive capacity. &#







Flashcard 1621047512332

Tags
#cashflow-statement
Question
FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv

NI= [...]

NCC= [...]
Answer
  • NI: Net income available to common shareholders.
  • NCC: Net non-cash charges.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621052493068

Tags
#cashflow-statement
Question
FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv

FCInv = [...]

WCInv = [...]
Answer
  • FCInv: Investment in fixed capital.
  • WCInv: Investment in working capital.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621054590220

Tags
#cashflow-statement
Question
After-tax interest expense. Add this back to net income because:

  • Interest expense net of the related tax savings was [...] .
Answer
deducted in arriving at net income

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
h charges. These represent depreciation and other non-cash charges minus non-cash gains. The add-back of net non-cash expenses is usually positive, because depreciation is a major part of total expenses for most companies. Int (1 - Tax rate): <span>After-tax interest expense. Add this back to net income because: FCFF is the cash flow available for distribution among all suppliers of capital, including debt-holders, and Interest expense net of the related tax savings was deducted in arriving at net income. The add-back is after-tax, because the discount rate in the FCFF model (WACC) is also calculated on an after-tax basis. FCInv: Investment in fixed capital. It equ







The temporal lobes, found on the outsides of each hemisphere (i.e., around the temples), contain the primary auditory cortex.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The temporal lobes rest on top of, and are connected to the limbic system (e.g., amygdala and hippocampus); thus the temporal lobes are also involved in emotional behavior and memory
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The left temporal lobe is involved in verbal memory and language comprehension (Wernicke's area)
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The right temporal lobe is involved in visual memory.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Temporal lobe damage may result in increased aggressive behavior, increased or decreased interest in sexual behavior, interference with memory, and problems understanding speech (Wernicke's aphasia).
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The occipital lobes, located at the back of the brain, housethe primaryvisual cortex and are involved in sight, reading, and visual images.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Occipital lobe damage is not very common, but may result from a stroke or tumor.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Damage may lead to difficulty recognizing drawn objects, difficulty identifying colors, hallucinations and illusions, inability to recognize words (word blindness), and problems with reading or writing.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




the subcortical brain areas that include the corpus callosum, the limbic system, and the basal ganglia
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The corpus callosum is a bundle of nerve fibers that serves as a bridge between the left and right hemispheres,
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The right hemisphere controls the left side of the body, and sensory experiences on the leftsideof the body (e.g., an object placed inthe left hand) are always processed by the right hemisphere. In contrast, the left hemisphere controls the right side of the body, and sensory experiences on the right side of the body (e.g., an image flashed in the right visual field) are always processed by the left hemisphere. This is true regardless of whether the person's corpus callosum is intact or severed.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




split-brain patients
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




To better understand communication between the two hemispheres, experiments have been undertaken with split-brain patients. These patients have had their corpus callosum severed in an attempt to reduce severe epileptic seizures. With a severed corpus callosum, the right hemisphere still processes the experiences of the left side of the body, and vice-versa; however, information can no longer be shared with or transferred to the opposite hemisphere. In the classic study with split-brain patients, the word HEART was flashed in such a way that HE was seen in the left visual field only, and ART was seen in the right visual field only. Since HE was seen in the left visual field, it was processed by the right hemisphere. With a severed corpus callosum no communication could occur between the two hemispheres, thus patients were unable to verbalize the word (as there is no language in the right hemisphere). They were able to verbalize ART since it was flashed to the right visual fields and therefore directly registered in the left hemisphere, which controls language
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The limbic system is largely involved in emotions (e.g., fear, anger, pleasure), basic drives (e.g., sex, hunger), learning, olfaction, and memory. The limbic system also influences our autonomic nervous system and endocrine system.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Key limbic system structures include the thalamus, hypothalamus, hippocampus, amygdala, and septum.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The limbic system, a set of brain structures that forms the inner border of the cortex, is considered our primitive brain and plays a key role in our survival
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The thalamuslies belowthe corpuscallosum. It serves as the major sensory relay center for the brain, receiving input from all our senses except olfaction (smell).
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The thalamus then integrates and processes this information before projecting it to the appropriate cortical areas. The thalamus is critical in the perception of pain. Abnormalities of the thalamus have also been linked to schizophrenia (e.g., misperceptions of sensory input).
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Through its connections to the endocrine system (e.g., pituitary, thyroid, adrenal glands) and autonomic nervous system, the hypothalamus serves a major role in homeostasis, including regulating temperature, hunger, thirst, sex, cyclic sex hormone secretion (e.g., the menstrual cycle), aggression, and the sleep-wake cycle.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Withinthe hypothalamus, the group of cells called the suprachiasmic nucleus (SCN) is considered the body's circadian clockbecause it regulates the sleep-wake cycle.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The hypothalamus directly influences the pituitary gland by secreting hypothalamic releasing andhypothalamic inhibiting hormones (e.g., thyrotropin-releasing hormone, corticotropin-releasing hormone). In response to hypothalamic hormones the pituitary secretes its own hormones (e.g., growth hormone, thyroid stimulating hormone, adrenocorticotropic hormone) that activate the other endocrine glands (e.g., thyroid, pancreas)
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The primary function of the hippocampus is memory, specifically the consolidation of conscious memories. The hippocampus stores new information and events as lasting memories.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The amygdala attaches emotional significance to sensory input; it is strongly implicated in fear (e.g., startle response), aggression, and emotional memory. The amygdala essentially controls the fear response, receiving and integrating sensory input to determine the level of threat. The amygdala is also involved in the memory of fear, and thus has been linked to PTSD.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Stimulating the amygdala increases aggression. When the amygdala is removed or destroyed, aggression is diminished. KIuver-Bucy syndrome was first described in monkeys thathad undergone bilateral temporal lobectomies with complete removal of the amygdala. Kluver-Bucy syndrome results in placidity, apathy, hypersexuality, hyperphagia (excessive eating), and agnosias (problems withrecognition)
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The septum moderates or decreases aggression. Damage to the septum can result in septal rage syndrome
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




In other words, there is no fixed optimal lag—It depends on the targeted retention interval.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




the expanding practice schedule yielded higher retention of foreign vocabu- lary over the extensive training period, suggesting that expanding practice may especially maintain knowledge over long periods of time
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Although acquiring and retaining knowledge matters in education, a more crucial objective is transfer, the ability to utilize what was learned to answer new questions or solve new problems
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




some evidence indicates that spac- ing can enhance meaningful learning that generalizes to new situations
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Flashcard 1621180681484

Tags
#cashflow-statement
Question
FCInv: [...]
Answer
Investment in fixed capital.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
olders, and Interest expense net of the related tax savings was deducted in arriving at net income. The add-back is after-tax, because the discount rate in the FCFF model (WACC) is also calculated on an after-tax basis. <span>FCInv: Investment in fixed capital. It equals capital expenditures for PP&E minus sales of fixed assets. WCInv: Investment in working capital. It equals the increase in short-term operating assets net of operating lia







Flashcard 1621183040780

Tags
#cashflow-statement
Question
FCInv = Capex - [...]
Answer
sales of fixed assets.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
olders, and Interest expense net of the related tax savings was deducted in arriving at net income. The add-back is after-tax, because the discount rate in the FCFF model (WACC) is also calculated on an after-tax basis. <span>FCInv: Investment in fixed capital. It equals capital expenditures for PP&E minus sales of fixed assets. WCInv: Investment in working capital. It equals the increase in short-term operating assets net of operating liabilities. Example







Flashcard 1621185400076

Tags
#cashflow-statement
Question
WCInv: [...]
Answer
Investment in working capital

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
3; The add-back is after-tax, because the discount rate in the FCFF model (WACC) is also calculated on an after-tax basis. FCInv: Investment in fixed capital. It equals capital expenditures for PP&E minus sales of fixed assets. <span>WCInv: Investment in working capital. It equals the increase in short-term operating assets net of operating liabilities. Example Quinton is evaluating Proust Company for 2014. Quinton has gathered the following information (in millions):







Flashcard 1621187759372

Tags
#cashflow-statement
Question
WCInv = [...] minus operating liabilities.
Answer
Increase in short-term operating assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
3; The add-back is after-tax, because the discount rate in the FCFF model (WACC) is also calculated on an after-tax basis. FCInv: Investment in fixed capital. It equals capital expenditures for PP&E minus sales of fixed assets. <span>WCInv: Investment in working capital. It equals the increase in short-term operating assets net of operating liabilities. Example Quinton is evaluating Proust Company for 2014. Quinton has gathered the following information (in millions):







Flashcard 1621191167244

Tags
#cashflow-statement
Question
NCC = Depreciation + [...] - Cash expenses during the year in which they are capitalized
Answer
non-cash restructuring charges

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
. The tax treatment of all non-cash items is the same as that of other items in the books. There are no differed taxes incurred. Calculate the FCFF for Proust for the year. Solution <span>NCC = Depreciation + non-cash restructuring charges - Cash expenses during the year in which they are capitalized = 130 + 30 - 200 = -$40 million FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv = 250 + (-40) + 50 (1 - 0.3) - 20 - 100 = $125 million FCFF







Flashcard 1621193526540

Tags
#cashflow-statement
Question
FCFF can also be computed from [...]
Answer
cash flow from operating activities (CFO)

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
- Cash expenses during the year in which they are capitalized = 130 + 30 - 200 = -$40 million FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv = 250 + (-40) + 50 (1 - 0.3) - 20 - 100 = $125 million <span>FCFF can also be computed from cash flow from operating activities (CFO). FCFF = CFO + Int (1 - Tax rate) - FCInv The convenience of this approach to calculation of FCFF is that CFO is already adjusted for non-







Flashcard 1621195885836

Tags
#cashflow-statement
Question
FCFF = [...] + Int (1 - Tax rate) - FCInv
Answer
CFO

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
#13; FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv = 250 + (-40) + 50 (1 - 0.3) - 20 - 100 = $125 million FCFF can also be computed from cash flow from operating activities (CFO). <span>FCFF = CFO + Int (1 - Tax rate) - FCInv The convenience of this approach to calculation of FCFF is that CFO is already adjusted for non-cash charges and changes in working capital accounts.







The basal ganglia are inhibitory. They generally function to put the brakes on movement, allowing us to be still and maintain posture. In order to move voluntarily, the brakes must then be released.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The basal ganglia play a vital rolein the regulation and coordination of movement and with establishing posture. In order to move smoothly, the cortical areas involved in control of movement (e.g., premotor cortex, primary motor cortex) must receive information from the basal ganglia. Without this information, the cortex is unable to properly direct motor control, and the deficits seen in movement-related disorders are evident.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The main nuclei of the basal ganglia include the caudate nucleus, putamen, substantia nigra, globus pallidus, and subthalamic nucleus
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Dysfunction in the basal ganglia tends to result in one of two problems: the presence of extraneous unwanted movements (e.g., as seen in Huntington's), or difficulty with intended movement (e.g., as seen in Parkinson's).
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Huntington's disease results from degeneration of the caudate nucleus and putamen, and produces continuous thrusting movements of the face and limbs.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Parkinson's disease results from a slow and steady loss of dopaminergic neurons in the substantia nigra, and results in tremor, rigidity, and bradykinesia (slowed movements).
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Two other disorders related to the basalganglia abnormalities include Tourette's and OCD
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




the cerebellum provides excitatory inputs that are responsible for maintaining smooth movement and coordinating motor activity.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The cerebellum also controls the automatic adjustments of posture and muscle tone that result in our ability to maintain balance and equilibrium, and is involvedin motorlearning.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




The hallmark of cerebellar disease is ataxia, defined as a lack of coordination of voluntary movements in the absence of weakness or sensory loss. Symptoms of cerebellar damage may appear as problems with posture, gait, incorrect timing in the
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




activation of muscles, disequilibrium, vertigo, inability to reach out and grab objects, difficulty makingrapid movements, orproblems coordinating fine movements.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

pdf

cannot see any pdfs




Flashcard 1621219216652

Tags
#analyst-notes #cfa-level-1 #corporate-finance #introduction #reading-35-capital-budgeting
Question
Which questions should you ask in the "Planning the capital budget" step?

How does the project fit within the company's overall strategies?

What's the [...] and [...]
Answer


timeline and priority?

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. <span>How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results

Original toplevel document

Subject 1. Capital Budgeting: Introduction
include in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d







Flashcard 1621222624524

Tags
#2-2-comparison-of-profit-measures #cfa #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Question
Failing to earn [...] over the long run has a debilitating impact on the firm’s ability to function properly as a business enterprise.
Answer
normal profits

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise.

Original toplevel document

2. OBJECTIVES OF THE FIRM
quence, the spot price has dramatically increased by 44.3 percent. Economic rent has resulted from this market relationship of a relatively fixed supply of gold and a rising demand for it. <span>2.2. Comparison of Profit Measures All three types of profit are interconnected because, according to Equation 4, accounting profit is the summation of normal and economic profit. In the short run, the normal profit rate is relatively stable, which makes accounting and economic profit the two variable terms in the profit equation. Over the longer term, all three types of profit are variable, where the normal profit rate can change according to investment returns across firms in the industry. Normal profit is necessary to stay in business in the long run; positive economic profit is not. A business can survive indefinitely by just making the normal profit return for investors. Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise. Consequentially, the market value of equity and shareholders’ wealth deteriorates whenever risk to achieving normal profit materializes and the firm fails to reward investors for their risk exposure and for the opportunity cost of their equity capital. To summarize, the ultimate goal of analyzing the different types of profit is to determine how their relationships to one another influence the firm’s market value of equity. Exhibit 2 compares accounting, normal, and economic profits in terms of how a firm’s market value of equity is impacted by the relationships among the three types of profit. Exhibit 2. Relationship of Accounting, Normal, and Economic Profit to Equity Value Relationship between Accounting Profit and Normal Profit Economic Profit Firm’s Market Value of Equity Accounting profit > Normal profit Economic profit > 0 and firm is able to protect economic profit over the long run Positive effect Accounting profit = Normal profit Economic profit = 0 No effect Accounting profit < Normal profit Economic profit < 0 implies economic loss Negative effect <span><body><html>







Flashcard 1621230750988

Tags
#cfa-level-1 #reading-25-understanding-income-statement
Question
[...] may include labour and material costs, depreciation, some salaries (e.g., salespeople’s), and other direct sales related expenses
Answer
Cost of Goods sold

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

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

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. <span>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 1621237828876

Tags
#cfa #cfa-level-1 #financial-reporting-and-analysis #reading-24-understanding-income-statements
Question
Comprehensive income is usually reported on a statement of [...]
Answer
stockholders' equity.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Comprehensive income
lity 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 should be all-inclusive comprehensive income. <span>Comprehensive income may be reported on an income statement or separate statement, but is usually reported on a statement of stockholders' equity. <span><body><html>







Flashcard 1621240712460

Question
The indirect method adjusts net income for all non-cash items and the net changes in [...].
Answer
the operating working capital accounts

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 2. Preparing the Cash Flow Statement
; It adjusts each item in the income statement to its cash equivalent. It shows operating cash receipts and payments. More cash flow information can be obtained and it is more easily understood by the average reader. <span>The indirect method reconciles net income to net cash flow from operating activities by adjusting net income for all non-cash items and the net changes in the operating working capital accounts. It shows why net income and operating cash flows differ. It is used by most companies. The direct and indirect methods are alternative formats for reporti







Flashcard 1621243858188

Tags
#fucked-up-questions
Question
Where in the income statement should an increase in prepaid expenses be added to calculate the cash payments?
Answer
Other operating expenses

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

In calculating the cash payments for other operating expenses, which of the following items must a company add to the other operating expenses reported on the income statement?
An increase in prepaid expenses must be added to the other operating expenses reported on the income statement to calculate the cash payments for other operating expenses. An increase in prepaid expenses represents an outflow of cash that is not yet reported on the income statement as an expense.







Flashcard 1621251198220

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

To which balance sheet component do patents, copyrights, franchises, goodwill, trademarks, trade names, secret processes, and organization costs belong.

Answer
Intangible Assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 1. Components and Format of the Balance Sheet
operty, Plant, and Equipment These are properties of a durable nature used in the regular operations of the business. With the exception of land, most assets are either depreciable (such as a building) or consumable. <span>Intangible Assets These lack physical substance and usually have a high degree of uncertainty concerning their future benefits. They include patents, copyrights, franchises, goodwill, trademarks, trade names, secret processes, and organization costs. Other Assets These vary widely in practice. Examples include deferred charges (long-term pre-paid expenses), non-current receivables, intangible assets, assets







Flashcard 1621266664716

Tags
#cashflow-statement
Question
FCF accounts for Capex and [...]
Answer
dividend payments

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
CFO. CFO does not include cash outlays for replacing old equipment. Free Cash Flow (FCF) is intended to measure the cash available to a company for discretionary uses after making all required cash outlays. <span>It accounts for capital expenditures and dividend payments, which are essential to the ongoing nature of the business. The basic definition is cash from operations less the amount of capital expenditures required to maintain the company's present productive capacity. &#







Flashcard 1621270072588

Tags
#cashflow-statement
Question
Net income available to common shareholders is the company's earnings after [...], taxes and [...]
Answer
interest



preferred dividends.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621272694028

Tags
#cashflow-statement
Question

Net non-cash charges represent depreciation and [...] minus [...].
Answer
other non-cash charges

non-cash gains

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621274529036

Tags
#cashflow-statement
Question
The add-back of net non-cash expenses is usually positive or negative?
Answer
Positive

because depreciation is a major part of total expenses for most companies.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621276364044

Tags
#cashflow-statement
Question
The add-back of net non-cash expenses is usually positive because [...]
Answer
depreciation is a major part of total expenses for most companies.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621280558348

Tags
#cashflow-statement
Question
FCInv: (Investment in fixed capital) equals capital expenditures for Plant Property & Equipment minus [...] .
Answer
sales of fixed assets

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







Flashcard 1621283179788

Tags
#cashflow-statement
Question
Investment in working capital equals [...] operating assets net of [...]
Answer
the increase in short-term

operating liabilities.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 3. Cash Flow Statement Analysis
; Free cash flow = CFO - capital expenditure Free Cash Flow to the Firm (FCFF): Cash available to shareholders and bondholders after taxes, capital investment, and WC investment. <span>FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv NI: Net income available to common shareholders. It is the company's earnings after interest, taxes and preferred dividends. NCC: Net non-cash







#cashflow-statement
Free Cash Flow to Equity (FCFE): Cash available to stockholders after payments to and inflows from bondholders. This is the cash flow from operations net of capital expenditures and debt payments (including both interest and repayment of principal).

FCFE = FCFF + Net borrowing - Int ( 1- Tax rate)

FCFE can be calculated from net income. Recall that FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv. Then:

FCFE = NI + NCC + Net borrowing - FCInv - WCInv

FCFE can be calculated from CFO.

FCFE = CFO + Net borrowing - FCInv

This is different from the formula given in the textbook since net debt repayment should be included in net borrowing!

Cash Flow Ratios

The cash flow statement may also be used in financial ratios measuring a company's profitability, performance, and financial strength.

Performance Ratios

  • Cash flow to revenue = CFO / Net revenue: cash generated per dollar of revenue.
  • Cash return on assets = CFO / Average total assets: cash generated from all resources.
  • Cash return on equity = CFO / average shareholders' equity: cash generated from owner resources.
  • Cash to income = CFO / Operating income: cash-generating ability of operations.
  • Cash flow per share = (CFO - Preferred dividends) / number of common shares outstanding: operating cash flow on a per-share basis.

Coverage Ratios

  • Debt coverage = CFO / Total debt: financial risk and financial leverage.
  • Interest coverage = (CFO + Interest Paid + Taxes paid) / Interest paid: ability to meet interest obligations.
  • Reinvestment = CFO / Cash paid for long-term assets: ability to acquire assets with operating cash flows.
  • Debt payment = CFO / Cash paid for long-term debt repayment: ability to pay debt with operating cash flows.
  • Dividend payment: CFO / Dividends paid: ability to pay dividends with operating cash flows.
  • Investing and financing: CFO / Cash outflows for investing and financing activities: ability to acquire assets, pay debts, and make distributions to owners.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on

Subject 3. Cash Flow Statement Analysis
ion FCFF = CFO + Int (1 - tax rate) - Investment in fixed capital = 250 + 50 (1 - 0.3) - 240 = $45 million As CFO is given, information on WCInv and non-cash charges is not required. <span>Free Cash Flow to Equity (FCFE): Cash available to stockholders after payments to and inflows from bondholders. This is the cash flow from operations net of capital expenditures and debt payments (including both interest and repayment of principal). FCFE = FCFF + Net borrowing - Int ( 1- Tax rate) FCFE can be calculated from net income. Recall that FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv. Then: FCFE = NI + NCC + Net borrowing - FCInv - WCInv FCFE can be calculated from CFO. FCFE = CFO + Net borrowing - FCInv This is different from the formula given in the textbook since net debt repayment should be included in net borrowing! Cash Flow Ratios The cash flow statement may also be used in financial ratios measuring a company's profitability, performance, and financial strength. Performance Ratios Cash flow to revenue = CFO / Net revenue: cash generated per dollar of revenue. Cash return on assets = CFO / Average total assets: cash generated from all resources. Cash return on equity = CFO / average shareholders' equity: cash generated from owner resources. Cash to income = CFO / Operating income: cash-generating ability of operations. Cash flow per share = (CFO - Preferred dividends) / number of common shares outstanding: operating cash flow on a per-share basis. Coverage Ratios Debt coverage = CFO / Total debt: financial risk and financial leverage. Interest coverage = (CFO + Interest Paid + Taxes paid) / Interest paid: ability to meet interest obligations. Reinvestment = CFO / Cash paid for long-term assets: ability to acquire assets with operating cash flows. Debt payment = CFO / Cash paid for long-term debt repayment: ability to pay debt with operating cash flows. Dividend payment: CFO / Dividends paid: ability to pay dividends with operating cash flows. Investing and financing: CFO / Cash outflows for investing and financing activities: ability to acquire assets, pay debts, and make distributions to owners. <span><body><html>




Subject 1 Time Value of Money and Interest Rates
#reading-6-time-value-of-money
The time value of money (TVM) refers to the fact that $1 today is worth more than $1 in the future. This is because the $1 today can be invested to earn interest immediately. The TVM reflects the relationship between present value, future value, time, and interest rate. The time value of money underlies rates of return, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between time, cash flow, and interest rate.

There are three ways to interpret interest rates:

  • Required rate of return is the return required by investors or lenders to postpone their current consumption.
  • Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value).
  • Opportunity cost is the most valuable alternative investors give up when they choose what to do with money.
In a certain world, the interest rate is called the risk-free rate. For investors preferring current to future consumption, the risk-free interest rate is the rate of compensation required to postpone current consumption. For example, the interest rate paid by T-bills is a risk-free rate of interest.

In an uncertain world, there are two factors that complicate interest rates:

  • Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into account the expected increase in prices. The nominal cost of money consists of the real rate (a pure rate of interest) and an inflation premium.

  • Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default risk. The return that borrowers pay thus comprises the nominal risk-free rate (real rate + an inflation premium) and a default risk premium.
Compounding is the process of accumulating interest over a period of time. A compounding period is the number of times per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously.

Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. Discounted cash flow is the present value of some future cash flow.

statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on




Flashcard 1621291830540

Tags
#reading-6-time-value-of-money
Question
Why is money worth more today than in the future?
Answer
This is because the $1 today can be invested to earn interest immediately.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
The time value of money (TVM) refers to the fact that $1 today is worth more than $1 in the future. This is because the $1 today can be invested to earn interest immediately. The TVM reflects the relationship between present value, future value, time, and interest rate. The time value of money underlies rates of return, interest rates, required rates of retu







Flashcard 1621294189836

Tags
#reading-6-time-value-of-money
Question
The TVM reflects the relationship between [...] , future value, time, and [...] .
Answer
present value

interest rate

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
The time value of money (TVM) refers to the fact that $1 today is worth more than $1 in the future. This is because the $1 today can be invested to earn interest immediately. The TVM reflects the relationship between present value, future value, time, and interest rate. The time value of money underlies rates of return, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between







Flashcard 1621296549132

Tags
#reading-6-time-value-of-money
Question
There are [...] ways to interpret interest rates
Answer
3

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
interest rate. The time value of money underlies rates of return, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between time, cash flow, and interest rate. <span>There are three ways to interpret interest rates: Required rate of return is the return required by investors or lenders to postpone their current consumption. Discount rate is the rate used to discount future cash flows







Flashcard 1621298908428

Tags
#reading-6-time-value-of-money
Question
[...] is the return required by investors or lenders to postpone their current consumption.
Answer
Required rate of return

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
n, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between time, cash flow, and interest rate. There are three ways to interpret interest rates: <span>Required rate of return is the return required by investors or lenders to postpone their current consumption. Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value). Opportunity cost is the







Flashcard 1621301267724

Tags
#reading-6-time-value-of-money
Question
[...] is the rate used to discount future cash flows to allow for the time value of money
Answer
Discount rate

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
ts the relationship between time, cash flow, and interest rate. There are three ways to interpret interest rates: Required rate of return is the return required by investors or lenders to postpone their current consumption. <span>Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value). Opportunity cost is the most valuable alternative investors give up when they choose what to do with money. In a ce







Flashcard 1621303627020

Tags
#reading-6-time-value-of-money
Question
[...] is the most valuable alternative investors give up when they choose what to do with money.
Answer
Opportunity cost

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
e return required by investors or lenders to postpone their current consumption. Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value). <span>Opportunity cost is the most valuable alternative investors give up when they choose what to do with money. In a certain world, the interest rate is called the risk-free rate. For investors preferring current to future consumption, the risk-free interest rate is the rate of compensation







Flashcard 1621305986316

Tags
#reading-6-time-value-of-money
Question
there are two factors that complicate interest rates:
Answer
Inflation

Risk

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
urrent to future consumption, the risk-free interest rate is the rate of compensation required to postpone current consumption. For example, the interest rate paid by T-bills is a risk-free rate of interest. In an uncertain world, <span>there are two factors that complicate interest rates: Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into accoun







Flashcard 1621308345612

Tags
#reading-6-time-value-of-money
Question
The [...] consists of the real rate (a pure rate of interest) and an inflation premium.
Answer
nominal cost of money

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
licate interest rates: Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into account the expected increase in prices. <span>The nominal cost of money consists of the real rate (a pure rate of interest) and an inflation premium. Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default







Flashcard 1621310704908

Tags
#reading-6-time-value-of-money
Question
The return that borrowers pay comprises the nominal risk-free rate ( [...] ) and a [...]
Answer
real rate + an inflation premium

default risk premium.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
a pure rate of interest) and an inflation premium. Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default risk. <span>The return that borrowers pay thus comprises the nominal risk-free rate (real rate + an inflation premium) and a default risk premium. Compounding is the process of accumulating interest over a period of time. A compounding period is the number of times per year that interest is paid. Continuous compounding occur







Flashcard 1621313064204

Tags
#reading-6-time-value-of-money
Question
[...] is the process of accumulating interest over a period of time.
Answer
Compounding

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
heir ability to repay lenders. Lenders therefore charge interest rates that incorporate default risk. The return that borrowers pay thus comprises the nominal risk-free rate (real rate + an inflation premium) and a default risk premium. <span>Compounding is the process of accumulating interest over a period of time. A compounding period is the number of times per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added cont







Flashcard 1621315423500

Tags
#reading-6-time-value-of-money
Question
A compounding period is the [...] that interest is paid.
Answer
number of times per year

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
incorporate default risk. The return that borrowers pay thus comprises the nominal risk-free rate (real rate + an inflation premium) and a default risk premium. Compounding is the process of accumulating interest over a period of time. <span>A compounding period is the number of times per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of







Flashcard 1621317782796

Tags
#reading-6-time-value-of-money
Question
[...] occurs when the number of compounding periods becomes infinite.
Answer
Continuous compounding


statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
nominal risk-free rate (real rate + an inflation premium) and a default risk premium. Compounding is the process of accumulating interest over a period of time. A compounding period is the number of times per year that interest is paid. <span>Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. Disco







Flashcard 1621320142092

Tags
#reading-6-time-value-of-money
Question
[...] is the calculation of the present value of some known future value.
Answer
Discounting

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
ing interest over a period of time. A compounding period is the number of times per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously. <span>Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. Discounted cash flow is the present value of some future cash flow. <span><body></







Flashcard 1621322501388

Tags
#reading-6-time-value-of-money
Question
[...] is the rate used to calculate the present value of some future cash flow.
Answer
Discount rate

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of some known future value. <span>Discount rate is the rate used to calculate the present value of some future cash flow. Discounted cash flow is the present value of some future cash flow. <span><body><html>







Flashcard 1621324860684

Tags
#reading-6-time-value-of-money
Question
[...] is the present value of some future cash flow.
Answer
Discounted cash flow

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Subject 1 Time Value of Money and Interest Rates
ding periods becomes infinite; interest is added continuously. Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. <span>Discounted cash flow is the present value of some future cash flow. <span><body><html>







#tvm
The nominal risk-free rate of return includes both the real risk-free rate of return and the expected rate of inflation. A decrease in expected inflation rate would decrease the nominal risk-free rate of return, but would have no effect on the real risk-free rate of return.
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on




Flashcard 1621333773580

Tags
#tvm
Question
What rates are included in the nominal rate of interest?
Answer
real risk-free

inflation.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Open it
The nominal risk-free rate of return includes both the real risk-free rate of return and the expected rate of inflation. A decrease in expected inflation rate would decrease the nominal risk-free rate of return, but would have no effect on the real risk-free rate of return.







Flashcard 1621336132876

Tags
#tvm
Question
A decrease in expected inflation rate would decrease the [...]
Answer
nominal risk-free rate of return

but would have no effect on the real risk-free rate of return.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Open it
The nominal risk-free rate of return includes both the real risk-free rate of return and the expected rate of inflation. A decrease in expected inflation rate would decrease the nominal risk-free rate of return, but would have no effect on the real risk-free rate of return.







Flashcard 1621338492172

Tags
#tvm
Question
A decrease in expected inflation rate would have no effect on [...] rate of return.
Answer
the real risk-free rate of return.

But would decrease the nominal risk-free rate of return

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Open it
The nominal risk-free rate of return includes both the real risk-free rate of return and the expected rate of inflation. A decrease in expected inflation rate would decrease the nominal risk-free rate of return, but would have no effect on the real risk-free rate of return.







Flashcard 1621343210764

Question
Operating cash inflows by source (e.g., cash received from [...] , cash received from [...] )
Answer
Customers

investment income

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 2. Preparing the Cash Flow Statement
perating activities. There are two methods of converting the income statement from an accrual basis to a cash basis. Companies can use either the direct or the indirect method for reporting their operating cash flow. <span>The direct method discloses operating cash inflows by source (e.g., cash received from customers, cash received from investment income) and operating cash outflows by use (e.g., cash paid to suppliers, cash paid for interest) in the operating activities section of the cash flow statement. It adjusts each item in the income statement to its cash equivalent. It shows operating cash receipts and payments. More cash flow information can be obtained and it is mor







Flashcard 1621345832204

Question
Operating cash outflows by use (e.g., cash paid to [...] , cash paid [...] )
Answer
suppliers

for interest

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill
Subject 2. Preparing the Cash Flow Statement
perating activities. There are two methods of converting the income statement from an accrual basis to a cash basis. Companies can use either the direct or the indirect method for reporting their operating cash flow. <span>The direct method discloses operating cash inflows by source (e.g., cash received from customers, cash received from investment income) and operating cash outflows by use (e.g., cash paid to suppliers, cash paid for interest) in the operating activities section of the cash flow statement. It adjusts each item in the income statement to its cash equivalent. It shows operating cash receipts and payments. More cash flow information can be obtained and it is mor







Flashcard 1621365755148

Question
r = [...] + Inflation premium + Default risk premium + Liquidity premium + [...]
Answer
Real risk-free interest rate

Maturity premium

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill






Flashcard 1621367590156

Tags
#tvm
Question
r = Real risk-free interest rate + [...] + Default risk premium + [...] + Maturity premium
Answer
Inflation premium

Liquidity premium

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill






Flashcard 1621370211596

Tags
#tvm
Question
r = Real risk-free interest rate + Inflation premium + [...] + Liquidity premium + Maturity premium
Answer
Default risk premium

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill






Flashcard 1621372046604

Tags
#tvm
Question
The [...] is the single-period interest rate for a completely risk-free security if no inflation were expected.

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill






Flashcard 1621378600204

Tags
#tvm
Question
The sum of the real risk-free interest rate and the inflation premium is the [...]

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill






Flashcard 1621380435212

Tags
#tvm
Question
Many countries have governmental short-term debt whose interest rate can be considered to represent the [...] interest rate in that country.
Answer
nominal risk-free

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill






Maturity Premium
#tvm
The maturity premium compensates investors for the increased sensitivity of the market value of debt to a change in market interest rates as maturity is extended, in general (holding all else equal). The difference between the interest rate on longer-maturity, liquid Treasury debt and that on short-term Treasury debt reflects a positive maturity premium for the longer-term debt (and possibly different inflation premiums as well).
statusnot read reprioritisations
last reprioritisation on reading queue position [%]
started reading on finished reading on