Course Code: 530

Duration: 1 day

Level: Basic

Fee: $795.00

Instructor: Douglas Carroll

CPE Credits: 7

Prerequisite: No Prerequisite Required.

This seminar provides a broad overview of two essential competencies for financial professionals: financial accounting and financial mathematics.

The first half of the day provides a concise practical introduction to financial accounting, the language of business. The presentation takes a user-friendly approach to the explanation and illustration of core accounting concepts.

These concepts are then examined in the context of the preparation and interpretation of the three primary financial statements; balance sheets, income statements and cash flow statements.  Participants will get exposure to the formal accounting treatment of assets, liabilities, revenues and expenses. The presentation will emphasize common sense insight helpful in the daily use and interpretation of financial statements.

The balance of the seminar provides an introduction to the mathematical tools widely employed in investments and finance. This segment begins with a review of the fundamental math used to quantify risk and return.  The presentation will then explore the application of those mathematical methods in the fixed income and equities markets. The initial portion of this segment addresses the basics: time value of money, compounding and discounting; rate of return, holding period returns and conventions for calculating; measuring risk for individual securities and portfolios.

The remainder of the segment emphasizes the specific application of these ideas; yields, price, valuation and risk for fixed income securities; analysis, valuation and risk for equities.

FINANCIAL ACCOUNTING

Financial Statements

• Types of Financial Statements
• How the Financial Statements Relate to one Another

 General Accounting Issues

• GAAP (Generally Accepted Accounting Principles)
• Accounting Concepts and Conventions

 Structure and Interpretation of Financial Statements

• Balance Sheet: Assets, Liabilities and Equities
• Income Statement: Revenues, Expenses, Gains and Losses
• Cash Flow Statement: Cash Provided by/used for Operations, Investments and Financing activities 

Tools And Techniques For Analyzing Financial Information

• Financial Ratios
• Use and Misuse of Financial Ratios in Analyzing Financial Statements
   

FINANCIAL MATHEMATICS

Fundamentals

• Time Value of Money
  • Cash Flows and Discount Rates
  • Present Values
  • Future Values
• Investment Measures
  • Returns: Calculation and Conventions
  • Risks: Standard Deviation, Covariance and Correlation

Fixed Income Analytics

• Price and Yield Calculations
• Yield Curves, Spot Rate Curves and Fixed Income Valuation
• Quantifying Interest Rate Risk
  • Non-callable Bonds: Modified Duration and Convexity
  • Callable Bonds: Effective Duration and Convexity

Equity Securities Analytics

• Equity Securities Valuation
• Discounted Cash Flows, Earnings or Dividends
• Earnings, Cash Flow, Sales or Book Value Multiples

Participants wishing to replicate calculations presented should have a calculator available.

After completing this program participants should be able to:

• Discuss the basics of the primary financial statements (balance sheets, income statements and cash flow statements): purpose, structure and basis of presentation
• Distinguish between accounting (book) value versus economic value, as well as explain reasons for possible differences between them
• Describe the various conventions for revenue and expense recognition and how the choice of accounting method impacts reported profitability 
• Recognize the concept of time value of money and how it is reflected in various fixed income and equity pricing/valuation models
• Discuss the importance and impact of the yield curve in fixed income securities analysis
• Describe the commonly used methodologies used in the valuation of equity securities