Curriculum
- 12 Sections
- 42 Lessons
- 2 Days
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- You, Us & This CourseWhat this course is about, and what you will get from it.0
- The Enterprise5
- 2.0Sole Proprietorship: Why do people work? And why, sometimes, a lone hand is a cool one.
- 2.1Partnerships – general and limited – are important to understand (especially if you encounter any private-equity folks at cocktail parties)
- 2.2The Corporation – Artificial legal person, that’s what a corporation is.
- 2.3Public and Private
- 2.4Agency problems and corporate governance: Principal-agent conflicts of interest are as old as the hills. See how auditors and the government (capital market regulators) get involved to keep things clean.
- The Balance Sheet5
- 3.0The Balance Sheet: A tally of assets and liabilities, and what’s left over is hopefully positive – that’s what a balance sheet is.
- 3.1Assets
- 3.2Liabilities: Future obligations that will have to be met by the corporation – these are called liabilities.
- 3.3Shareholder’s Equity: Shareholder’s equity is what is left for the owners, the shareholders. This includes both invested capital and retained earnings.
- 3.4Balance Sheet Case Studies: Facebook, Twitter, LinkedIn; Let’s immediately put our theoretical knowledge to work studying 3 comparable balance sheets.
- Income Statement4
- 4.0Income Statement: Revenue – Costs = Net Income. Conceptually simple, but the devil is in the details!
- 4.1The Net Income Waterfall: Follow the convoluted waterfall that takes us from revenue to net income. EBITDA, operating profit, and gross profit are some of the stops along the way.
- 4.2Statement of Comprehensive Income: Recurring or non-recurring? This is an important distinction about net income that folks need to know about.
- 4.3Income Statement Case Studies: Again let’s immediately put our knowledge to work – see how powerful Facebook’s business is, and how shaky Twitter is.
- Statement of Cash Flows5
- 5.0Statement of Cash Flows: Cash is key – a firm can go bankrupt despite significant assets, and significant profits, if it runs out of cash. That’s why we need a statement of cash flows distinct from the income statement and balance sheet.
- 5.1The Direct and Indirect Methods: Cash flows from operations, from financing and from investing: see how these are computed in the indirect and direct methods.
- 5.2Cash Flow Statement Case Studies: Facebook has a ferociously profitable business, that generates plenty of cash from operations. The firm is aggressive about re-investing this into assets for the future.
- 5.3Working with Cash Flows – I
- 5.4Working with Cash Flows – II
- Ratios3
- 6.0Ratios Introduced: Once we have financial statements, what do we do with them? Use them to analyse companies of course! And there are 2 important techniques for doing this: time-series and peer-group (cross-sectional) analysis.
- 6.1Liquidity, Leverage and Efficiency: Liquidity ratios focus on short-term solvency, leverage ratios focus on long-term solvency and turnover ratios focus on efficiency. There is a natural tension between efficiency and solvency!
- 6.2Profitability and Valuation: Profits and valuations – return-on-equity and return-on-assets. We are getting to the heart of corporate finance now.
- Some Advanced Topics3
- 7.0Dupont’s Identity: How can a firm make money for its shareholders? Three possible ways: profitability, leanness, and leverage. That’s what Dupont’s identity tells us.
- 7.1External Financing & The Sustainable Rate of Growth: How fast can a company grow if it forgoes external financing? Every startup should ask itself this.
- 7.2Common Accounting Shenanigans: Cheating on books is as old and as common as cheating on spouses. Auditors and the SEC are watching though, remember that.
- Case Studies3
- 8.0Facebook: Highly profitable, and growing like crazy: that’s why everyone loves Facebook’s stock.
- 8.1LinkedIn: A diversified business that might be huge – but also might turn into an also-ran. The jury is out on LinkedIn.
- 8.2Twitter: The jury definitely seems to be in on Twitter, and its not looking good.
- EPS4
- Inventories2
- More on Assets4
- Leases4
- 12.0Leases Introduced: Lease is a contract between lessee and lessor. Lessee makes payments for using the property owned by the Lessor. There are two types: Financial lease and Operating Lease. The accounting for both types is different.
- 12.1NPV of Lease Payments: The Financial Lease accounting requires computing net present value of all the lease payments.
- 12.2Operating Leases Vs Financial Leases: A lease is a financial lease if any one of four criteria given by the accounting bodies is met. There are pros and cons in both the types of leases. The lessee and lessor need to analyse these to decide which lease do they want to enter into.
- 12.3Leases Example: A simple example of lease accounting
Operating Leases Vs Financial Leases: A lease is a financial lease if any one of four criteria given by the accounting bodies is met. There are pros and cons in both the types of leases. The lessee and lessor need to analyse these to decide which lease do they want to enter into.
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