Compounding Resources

Accounting is the language of business. This 7-page Cheat Sheet teaches you everything you need to know. The Cheat Sheet teaches you everything you need to know about: • Principles, Formulas & Business Types • Assets, Bonds & Depreciation • Balance sheets • Income Statement & Cash Flows • Owners Equity • Journal entries Here are the most important accounting principles: • Comparability Financial statements must be comparable period to period • Conservatism Considers all risks | strict rules • Consistency Same accounting methods year to year • Constraints Information has a cost/benefit and is material • Cost principle Keep costs at purchase price or lower (lower of cost or market) • Economic entity Maintain separate records for each entity • Full disclosure Provides detailed information in addition to financial statements • Going concern Assume business is going to and has capability to continue • Matching Recognize cost the same time as benefit • Materiality Significance to the overall financial picture • Monetary unit Currency is used to record transactions and is assumed to be constant • Relevance Financial reporting has predictive, feedback, and timeliness value • Reliability Financial reporting is neutral, valid, and verifiable • Revenue recognition Conditions of how an organization records revenue • Time period Report financial activity in specific time periods 📚 Sign up here if you want to receive my free e-book about investing and Financial Analysis course: https://t.co/cwPWWDTvzO

How to get a job in investment banking Here are 400 interview questions you should prepare yourself for What will be covered: - Technical Questions & Answers - Accounting Questions & Answers – Basic - Accounting Questions & Answers – Advanced - Enterprise / Equity Value Questions & Answers – Basic - Enterprise / Equity Value Questions & Answers – Advanced - Valuation Questions & Answers – Basic - Valuation Questions & Answers – Advanced - Discounted Cash Flow Questions & Answers – Basic - Discounted Cash Flow Questions & Answers – Advanced - Merger Model Questions & Answers – Basic - Merger Model Questions & Answers – Advanced - LBO Model Questions & Answers – Basic - LBO Model Questions & Answers – Advanced - Brain Teaser Questions & Answers 🤔 What's the most important thing in investing according to you? Credit - We couldn't able to find original author but all due credits to them f __ 📚 Sign up here if you want to receive my free e-book about investing and Financial Analysis course: https://t.co/cwPWWDTvzO

What has worked in investing These 5 strategies outperformed the market: 1. Low Price in Relation to Asset Value 2. Low Price in Relation to Earnings 3. Significant insider purchases 4. Significant decline in the stock price 5. Small market cap The key learnings? 💡 Don’t try to time the market As difficult it is to sell when stock prices are high and everyone is optimistic, it is even more difficult to buy at market bottoms when pessimism is widespread and few have the confidence to venture back into stocks. 💡 This time it’s not different “The bull and bear markets of the last decade were no different from the bull and bear markets that preceded them. As stocks rose, the bulls came out of the woodwork, and at the top they fabricated theories that would support even higher prices. In the subsequent down markets, the bears would pounce with justifications for even lower prices.” – Jeremy Siegel 💡Let your winners run As an investor, you should let your winners run. Philip Morris is a great example according to Jeremy Siegel: ”From the end of 1925 through the end of 2006, Philip Morris delivered a 17.2% compound annual return, 7.4% greater than market indices. If you had invested $1.000 in the firm in 1925, it would be worth almost $380 million in 2007.” – Jeremy Siegel 🤔 That's it for today. What would you add? __ 📚 Sign up here if you want to receive my free e-book about investing and Financial Analysis course: https://t.co/cwPWWDTvzO

Wall Street Jargon Warren Buffett once said: Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway." But still it's important to understand Wall Street jargon. Here's what you need to know: 💡 “The Street” Wall Street in New York City forms the center of its financial district; NYSE, NASDAQ, and American Stock Exchange, among others, are headquartered on Wall Street. 💡Asset Resource with economic value that a corporation owns or controls with the expectation that it will provide a future benefit; Assets are reported on a company’s balance sheet and are bought or created to increase a firm’s value or benefit the firm’s operations. 💡Bond Fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental); Used by companies, states, and governments to finance projects and operations. 💡 Book Building Process by which an underwriter attempts to determine the price at which an initial public offering (IPO) will be offered. 🤔 What's your favorite metric? Let it know in the comments __ 📚 That's it for today. If you liked this, you’ll our free Financial Analysis course. Grab it for free here: https://lnkd.in/eXc9-yv9

15 Non-investing books everyone should read: • Sapiens - A brief history of humankind (Noah Harari) • Influence - The Psychology of Persuasion (Robert Cialdini) • Think Again (Adam Grant) • Gettings Things Done (David Allen) • The Obstacle Is The Way (Ryan Holiday) • The 4-Hour Workweek (Tim Ferris) • Atomic Habits (James Clear) • The Power of Habit (Charles Duhigg) • Tiny Habits (BJ Fogg) • Good Habits, Bad Habits (Wendy Wood) • Deep Work (Cal Newport) • Rework (Jason Fried & David Heinemeier) • 12 Rules for Life (Jordan Peterson) • The 7 Habits of Highly Effective People (Stephen Covey) • Eat That Frog! (Brian Tracy) Source visuals: TK Suited 💡 Did you like this? Receive my free Financial Analysis Course here: https://lnkd.in/ewnHQ_Sw

Data & Analytics Guide Here's everything you need to know The essence of data and analytics is about turning raw information into useful insights to help businesses make smarter decisions. It involves: 1. Information Extraction: Collecting and analyzing data from various sources. 2. Decision Support: Using insights to make informed and effective decisions. 3. Business Intelligence: Understanding market trends, customer behaviors, and competition. 4. Performance Measurement: Tracking and assessing the success of strategies. 5. Predictive Capabilities: Forecasting future trends and outcomes. 6. Innovation and Optimization: Finding new opportunities and improving existing processes. 7. Personalization: Tailoring products and services based on individual preferences. 8. Data-Driven Culture: Encouraging decision-making based on data and evidence. 9. Continuous Improvement: Using data for ongoing refinement and better performance. 📖 Did you like this? Grab my free e-book about investment banking here: https://lnkd.in/egdqWii5

Discounted Cash Flow Do you know how to value a company? This DCF framework from Aswath Damodaran will help you 📈 What is a discounted cash flow? A discounted cash flow (DCF) is a way to figure out the present value of future money. It considers that a dollar today is worth more than a dollar in the future. DCF helps in estimating the current value of an investment by discounting expected future cash flows. In simple terms, it helps evaluate how much an investment is worth today based on the money it's expected to generate in the future. 💁♂️ Why does it matter? - DCF is important for investment valuation. - Considers the time value of money. - Helps in estimating the present value of future cash flows. - Provides a more accurate assessment of an investment's worth. - Widely used in finance for decision-making. - Offers a systematic approach to evaluate investment profitability. 📌 What are some of the disadvantages of a DCF? - Complexity - Uncertain Future Cash Flows - Subjectivity - Sensitivity to Input - Time-Consuming - Lack of Realism: - Dependence on Initial Information 📖 Credit: Aswath Damodaran (NYU) 📖 Did you like this? Grab my free e-book about investment banking here: https://lnkd.in/egdqWii5

Excel Formulas Bible Here are 10 formulas everyone should know 1. SUM: Adds up all the numbers in a range. Example: =SUM(A1:A5) 2. AVERAGE: Calculates the average of a range of numbers. Example: =AVERAGE(B1:B10) 3. COUNT: Counts the number of cells that contain numbers. Example: =COUNT(C1:C8) 4. IF: Performs a conditional test and returns one value if true, another if false. Example: =IF(A1>10, "Yes", "No") 5. VLOOKUP: Searches for a value in the first column of a range and returns a value in the same row from another column. Example: =VLOOKUP(D1, A1:B10, 2, FALSE) 6. HLOOKUP: Similar to VLOOKUP, but searches for a value in the first row of a range and returns a value in the same column from another row. Example: =HLOOKUP(E1, A1:D5, 3, FALSE) 7. INDEX/MATCH: Retrieves a value at the intersection of a particular row and column in a given range. Example: =INDEX(A1:C5, MATCH("John", A1:A5, 0), 2) 8. CONCATENATE: Combines two or more text strings into one. Example: =CONCATENATE(A1, " ", B1) 9. LEFT/RIGHT/MID: Extracts characters from a text string. Example: =LEFT(A1, 3) (returns the first 3 characters of A1) 10. SUMIF: Adds up all numbers in a range that meet specified criteria. Example: =SUMIF(C1:C10, ">50") Credit - Eforexcel.com 📖 Did you like this? Grab my free e-book about investment banking here: https://lnkd.in/egdqWii5

Financial Ratios E-book This e-book teaches you everything you need to know Here are my 5 favorite ratios as a teaser: 1️⃣ Gross margin (GM) 🎯 What? Company's gross profit compared to its revenue 💡 Formula? Sales - COGS / Sales 2️⃣ EBIT Margin 🎯What? What percentage of sales remains as profit before tax and interest 💡 Formula? EBIT / Sales 3️⃣ Debt-to-Assets 🎯What? The total amount of debt a company has relative to its assets 💡 Formula? Debt / Assets 4️⃣ Debt-to-Equity 🎯What? Ratio used to calculate a company's financial leverage 💡Formula? Debt / Equity 5️⃣ CAPEX/Sales 🎯What? Measures the capital intensity of a company 💡 Formula? Capital Expenditures / Sales Source: Corporate Finance Institute® (CFI) 📚 If you liked this, you'll love my free Financial Analysis course: https://lnkd.in/eb6UJGXx

Investors are irrational That's why Behavioral Finance is essential Daniel Kahneman's theory about Behavioral Finance is groundbreaking. He won the Nobel Prize for this. His paper The Human Side of Decision Making by Daniel Kahneman covers everything you need to know. Here's what I learned: 1️⃣ Our brain uses two systems: System 1 and System 2 System 1 is fast, intuitive and automatic. It is prone to biases and errors such as overconfidence. System 2 is slow, analytical, and deliberate. It is necessary for complex tasks requiring focused attention. 2️⃣ Irrationality Humans are not rational. We all make a lot of irrational mistakes. 90% of Americans think they can drive better than average and 70% think they are smarter than average. 3️⃣ Prospect theory The prospect theory suggests that people feel losses twice as hard as gains. Many people don't want to play a Heads or Tails game where they can win $100 but risk losing $50. You should take this bet every single day. 4️⃣ The Halo Effect The halo effect is a cognitive bias where your overall impression of a person influences your perception on their individual traits or qualities. If you like someone, you'll overestimate their capabilities and vice versa. 5️⃣ Availability heuristic The availability heuristic is a cognitive bias where you judge the likelihood of an event based on how easily it comes to mind. A good example is 9/11 which made people afraid of flying. Credit: Investment Management Consultants Association 📖 Did you like this? you will love this financial statement guide : https://lnkd.in/dXt39DU8