FSA tips for CFA Preparation by Pristine (Annotated)

www.edupristine.com CFA Level I Financial Reporting and Analysis June 2011© Neev Knowledge Management – Pristine

Seminar Material Not for Sale Agenda • Introduction and context • Understanding the CFA Examination Structure • Introduction to FSA – FSA – Understanding Income Statement & Key Line Items – Key Concept Checkers • Complete Offering & Registration • Next Seminar© Neev Knowledge Management – Pristine 2 www.edupristine.com

Pristine has been started by professionals with diverse experience in financial Material Seminar Not for Sale services, IT and Auto who are alumnus of IITs & IIMs Innovative content – To improve understanding & learning capability of students. VisualizeFRM, VisualizeCFA as one of the best selling products Topic Expert Model (TEM ) – Industry professionals bring invaluable industry perspective for students. Pool of 300+ working professionals as active faculty members with the likes of CFA regional directors, Presidents of various banks Pristine Classroom/ Online delivery (synchronous and Founded with an aim asynchronous) – To increase of creating world reach and improve efficiency of class professionals in learning. Conducted 15+ the area of finance – batches with over 300 hours of particularly risk recorded content management and Testimonial - 53% of the students join us on the investment banking basis of referral is a testimonial of the effective Effective training methodologies to improve the performance training methodologies of the students and enhance the employability© Neev Knowledge Management – Pristine 3 www.edupristine.com

Seminar Material Key Authorization Not for Sale CFA Institute (2010-11) GARP (2007-10) Authorized Training provider – CFA Authorized Training provider -FRM Pristine is now the authorized training provider Largest player in India in the area of risk for CFA Exam trainings . Pristine is largest management training. Trained 1000+ students training provider for CFA in India with presence in risk management across seven major cities. PRMIA (2009-10) FPSB India (2010-11) Authorized Training provider – PRM/ APRM Authorized Training provider -CFP Sole authorized training for PRM Training in An authorized Education Provider for India. Largest player in India in the area of risk Chartered Financial Planner Charter. management training. Trained 1000+ students in risk management© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Key Associations* Not for Sale Bank Of America J. P. Morgan (2010) Mizuho (2010) Continuum Solutions (2010) Financial Modeling in Excel Financial Modeling in Excel Financial Modeling in Excel The Real Assets Group were trained in Bankers were using excel models that Associates were trained on valuation and Excel for infrastructure and real-estate they could not understand. Conducted mergers and acquisitions modeling financial modeling in Excel trainings to bridge the gap Franklin Templeton Credit-Suisse India (2009) HSBC (2008) CFA (2010) Risk Management and Quant. Analysis Risk Management and Quant. Analysis Students were facing a gap in the IT Professionals of Credit-Suisse India New joinees in HSBC had a gap in overall understanding of finance were trained on risk management. knowledge of Risk Management and topics like corporate finance, FSA and quantitative skills. Conducted trainings valuation. Provided training for over (On campus) to bridge the gap 100 hours to bridge the gap *Indicative List© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material …Key Associations Not for Sale FMS Delhi (2010) IIM Calcutta (2010) BITS Pilani (2009) Financial Modeling in Excel Financial Modeling in Excel Workshops on Basics of Finance Final Year MBA students of Faculty of Students about to go for internships and Management Studies, Delhi University Most of the students desire a career join jobs found a gap in their grasp of were trained in financial modeling so as knowledge of excel for financial in finance. Conducted training for to prepare them better for a job in modeling. Conducted training for 75+ 350+ students with an average rating finance. students with an average rating of 4.5+ of 4.5+ NISM (2008) Derivatives workshop for Hedging IIT Delhi (2009) Sydneham College (2009) Corporate finance Corporate in Ludhiana incurred huge Financial Modeling in Excel losses because of derivative trades Students get placed in finance Students about to join jobs found a (for hedging). Conducted trainings for companies (UBS, GS, MS, etc) with gap in their grasp of excel for financial directors and CFOs for better no understanding of the subject/ Job modeling. Conducted 40+ hours of understanding of derivative products Profile. Conducted workshop to training and helped students be ready bridge the gap for job© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Trainer Paramdeep Singh, Director and Faculty, Pristine • Extensive experience in the financial services, consulting and training domain. He has extensive knowledge of the financial services industry, where he raised growth capital for organizations and helped them improve their revenues. He has authored research papers and trained 1000s of senior people in the area of financial modeling, quantitative analysis and risk management. •Prior to founding Pristine, Paramdeep has worked in senior management positions as an Investment Banker with Standard Chartered Capital Markets (India) and as a consultant with Accenture Management Consulting. • Work experience as Industry Practitioner • Consultant to Reliance Energy (Power), strategizing their growth and cutting down the losses in energy distribution. He has helped them formulate their business plan. • Assisted clients in raising capital through Private Equity & IPO by analyzing & modeling business plans, preparing IM/DRHP, ensuring regulatory compliance and marketing the issue. He has Successfully placed two IPOs worth Rs. 100 Crore & achieved subscription of 32 & 11 times. • Experience as Trainer • He has trained participants from HSBC, JP Morgan, Mizuho Bank , ING Vysya, Bank of America for financial modeling in excel, receiving very good rating. • Has conducted workshops and training courses in IIM Calcutta, Sydneham, Welingkar on financial modeling in Excel receiving rave reviews • Published research papers & articles in leading news papers in the field of risk management and Basel II accords, which are now used by leading banks as reference material. • Paramdeep is an MBA from IIM Indore, where he secured the highest CGPA in his batch. He has completed his B. Tech and M. Tech in Mathematics and Computing from IIT Delhi© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale CFA – Your Clear Interest in finance • CFA charter provides you with a strong foundation for a variety of career choices in the investment profession – Interested in portfolio management, investment research, advisory services, or investment banking, you will benefit from a CFA charter * CFA Institute website© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for SaleCourse Structure Topic Area Level I Ethical and Professional Standards 15 Quantitative Methods 12 Economics 10 Financial Reporting and Analysis 20 Corporate Finance 8 Equity Investments 10 Fixed Income 12 Derivatives 5 Alternative Investments 3 Portfolio Management 5© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Way to CFA • Each exam is six hours long and is split between morning and afternoon sessions. There is a two- hour lunch break at the end of the morning session. – The Level I exam is composed of multiple-choice questions and is offered in June and December. – The Level II exam is composed of item-set questions and is offered in June only. – The Level III exam is composed of item-set and essay questions and is offered in June only. • Score matrix provided on the exam results is an indicator of overall performance – The “<=50%” range is considered poor; – “51%–70%” is considered poor to average; – “>70%” is considered average to above average Key to crack CFA Level I is by doing well in Ethics and FSA Atul,atul@eneev.com +91-93221 94932© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Fees Structure Levels I - Deadlines by 22 September by 16 February by 16 March Program Enrollment $405 $405 $490 (new Level I only) Exam Registration $630 $720 $970 ‒ Curriculum eBook version save $40 save $40 save $40 ‒ Curriculum Print version $ 20 (shipping) $ 20 (shipping) $ 20 (shipping) ‒ Curriculum eBook+Print version $ 50 (incl. shipping) $ 50 (incl. shipping) $ 50 (incl. shipping) CFA Institute now offers three options to all its candidates. You can either choose to obtain the curriculum in i) eBook form; ii) Print form or iii) Both eBook and in Print Suppose a candidate chooses to enroll by 16th Feb and chooses the ebook version then her total cost will be = 405 + 720 – 40 = $1085. If she had taken the print version she will pay 405+720+20(shipp. Charges) = $1145© Neev Knowledge Management – Pristine 12 www.edupristine.com

Seminar Material Not for Sale Financial Statements • There are five broad groupings for financial statement elements Assets • Economic resources of a company Liabilities • Creditor’s claim on the company’s resources Owner’s Equity • Residual claim on the resources Revenue • Inflows of economic resources to the company Expenses • Outflows of economic resources or increases in liabilities© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale© Neev Knowledge Management – Pristine Careers 15 www.edupristine.com

Seminar Material Not for Sale Income Statement & Component Line Items • The income statement is also referred as the statement of operations or P&L statement • Basic equation underlying the income statement Revenue – Expenses = Net Income/ (Loss) Components of an Income Statement Revenue Revenue, sales Gains Investment Income (eg. Interest, Dividends) Expenses Cost of goods sold SG & A Depreciation & Amortization Interest Expense Tax Expense Losses© Neev Knowledge Management – Pristine www.edupristine.com

Introduction to Income Statement EBITDA EBITA Dep. Non Cash Expenses Revenue Wages material Cost of Overhead Goods Sold Gross Profit Depreciation Wages Sales SG&A EBITA Marketing Amortization Operating Profit (EBIT) Interest Profit before tax Income Tax Taxes Deferred Net income Taxes Net Income Production Suppliers Employees/ Non-Cash Support Staff Sales Advertising Non-Cash Debt Govt. Non-Cash Equity Employees Suppliers Investors Investors© Neev Knowledge Management – Pristine 20 www.pristinecareers.com

Introduction to Income Statement - Example A business man sells 50 candies each worth $2. Cost of manufacturing each candies is $0.8 Sales and marketing expenses are $0.4 And the business is taxed at 35% Revenue = $50 *2 = $100 Wages material Cost of Goods Sold = Overhead $0.8*50 = $40 Gross Profit = 100-40 = $ 60 Depreciation Wages Sales SG&A = $0.4*50 Marketing = $20 Amortization Interest Profit before tax = 60 – 20 = $ 40 Income Tax Taxes = Deferred Net income = 40 -14 = $ 26 $ 14 Taxes Net Income Production Suppliers Employees/ Non-Cash Support Staff Sales Advertising Non-Cash Debt Govt. Non-Cash Equity Employees Suppliers Investors Investors© Neev Knowledge Management – Pristine 21 www.pristinecareers.com

Seminar Material Not for Sale Concept Checkers 1. Which of the following best describes an income statement? A. An income statement reports changes over a period of time in component accounts that comprise the ownership of a firm. B. An income statement summarizes the financial position of a company at a given point in time. C. An income statement measures a companys financial performance over a specified period of time.© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Basis of Accounting • There are two methods of accountings – Cash basis of Accounting – Accrual basis of Accounting • Cash accounting – Focuses on when cash is received and paid out • Revenue is accounted for when cash is received • Expense is accounted for when cash is paid out – Might not properly match revenues and expenses incurred within a period Payment Contract Consultant Hired Work received Awarded Completed Recognition of revenue in Cash Accounting23 www.edupristine.com

Seminar Material Not for Sale Basis of Accounting • Accrual basis of Accounting – Focuses on the economic impact of the transaction • Revenue reported when earned • Expenses reported when incurred – Properly matches revenues and expenses in determining net income – Requires adjusting entries at the end of period (e.g. Depreciation) Payment Contract Work Completed received Awarded Cash Paid to Consultant Consultant Hired Recognition of revenue in Accrual method24 www.edupristine.com

Seminar Material Not for Sale Understanding the Income Statement – Matching Principle • Items in Income Statements follows MATCHING PRINCIPLE, which Includes Two Steps: – Identify all expenses incurred during the accounting period – Measures the expenses and matches those expenses against revenues earned • According to the principle – expenses are recognized when obligations are – Incurred (usually when goods are transferred or services rendered, e.g. sold), and – Offset against recognized revenues, which were generated from those expenses (related on the cause- and-effect basis), no matter when cash is paid out Payment Contract Work Completed received Awarded Cash Paid to Consultant Consultant The cost is recognized in the same Hired period as the work is completed25 www.edupristine.com

Seminar Material Not for Sale Accrual Based Accounting • Accrual based accounting results into 4 type of accounts • Accrued revenue – Goods or services are sold but cash is not received – hence revenue increases and Accounts receivable (an asset) increases. – On receipt of cash, cash increases and accounts receivable decreases • Unearned revenue: – Receives cash in advance before it provides goods • Cash increases and unearned revenue, a liability, increases by the same amount. • On firm providing good or service, revenue increases and the liability decreases • E.g. Magazine subscription • Prepaid expenses (Advance rent / electricity) – Pays cash for expenses before they are incurred • Cash (an asset) decreases and prepaid expense (also an asset) increases. • Prepaid expense decreases and expenses increase when the expense is actually incurred. • Accrued expenses. Expenses incurred but cash not paid hence liability ‒ Expenses increase and a liability for accrued expenses increases as well ‒ The liability decreases when the firm pays cash for expenses.© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Concept Checkers 1. The accrual basis of accounting________. A. Does not pertain to revenue recognition-only expense recognition. B. Recognizes the development of assets and liabilities externally. C. Allocates many transactions that produce cash flows to time periods other than those in which the cash flows occur.© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Ratio Analysis • Ratio analysis is useful as it helps us put numbers in perspective. • It is also useful for comparing companies with different sizes and companies from different industries. • It also helps in providing meaningful relationships between different accounting elements. • Types of ratios are as follows - Ratio Analysis Income Ratios Balance Sheet Ratios Mixed Ratios Profitability Ratios Solvency Ratios Activity Ratios Debt Ratios Market Ratios© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Profitability Ratios Gross Pr ofit Net Sales − COGS Gross Pr ofit M arg in = = Net Sales Net Sales Net Pr ofit Net Pr ofit M arg in = Net Sales Net Income RoE = Average Shareholder s Equity Net Income RoA = Total Assets EBIT * (1 − tax) RoC = Invested Capital© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Questions 1. Which of the following ratios is a measure of profitability A. Current ratio B. Fixed asset turnover ratio C. Pretax margin ratio 2. Are income taxes and cost of goods sold examples of expenses classified by nature or classified by function in the income statement? A. Income Taxes: Nature, Cost of goods sold: Function B. Income Taxes: Function, Cost of goods sold: Nature C. Income Taxes: Function, Cost of goods sold: Function© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Concept Checkers 1. Company ABC has a net profit margin of 15.4%, while total asset turnover is 1.2 and leverage is 0.7. The return on equity for Company ABC is closest to A. 14.52% B. 12.94% C. 11.43% RoE = NPM * TAT * Leverage = 15.4% *1.2 * 0.7 = 12.94%© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for SaleAbout CFA Prep School School for CFA Prep is a 100 Hrs extensive training program* that can enable you to prepare for and crack CFA Level I Examination www.edupristine.com

Seminar Material Not for SaleAbout School for CFA Prep • Extensive 100 Hours coverage • 16 days 5 hrs of regular classes • 3 days 5 hrs of revision classes School for CFA Prep is • 2 Mock tests a 100 Hrs extensive training program* • Extensive Question Bank to that can enable you = • prepare and Practice 2 Hrs of one-to-one doubt to prepare for and crack CFA Level I Exam clearing sessions* • Qualified faculty with CFA Charters and extensive industry and teaching experience www.edupristine.com

Seminar Material Not for SaleAbout HR Analytics • Proven credentials in successfully training CFA aspirants • Actionable and Innovative Material School for CFA Prep is • Complete Slide Pack a 100 Hrs extensive training program* that can enable you = • • Each Session followed by Quiz Adaptive feedback based on Quizto prepare for and crack CFA Level I Exam • Mock tests and feedback • Individual doubt solving session • CFA Visualized Formula Charts • Summarized Recordings for revision www.edupristine.com

Seminar Material Not for SaleTentative Schedule - Feb Date Day Course Topic 19/Feb/11 Sat CFA-Level-I Financial Reporting & Analysis -I 20/Feb/11 Sun CFA-Level-I Financial Reporting & Analysis -II 26/Feb/11 Sat CFA-Level-I Financial Reporting & Analysis -III 27/Feb/11 Sun CFA-Level-I Financial Reporting & Analysis -IV * Indicative list – Subject to Change www.edupristine.com

Seminar Material Not for SaleTentative Schedule - Mar Date Day Course Topic 05/Mar/11 Sat CFA-Level-I Quant-I 06/Mar/11 Sun CFA-Level-I Quant-II 12/Mar/11 Sat CFA-Level-I Quant-III 13/Mar/11 Sun CFA-Level-I Ethics 26/Mar/11 Sat CFA-Level-I Corporate Finance 27/Mar/11 Sun CFA-Level-I Equity Investments-I * Indicative list – Subject to Change www.edupristine.com

Seminar Material Not for SaleTentative Schedule - Apr Date Day Course Topic 02/Apr/11 Sat CFA-Level-I Equity Investments-II 03/Apr/11 Sun CFA-Level-I Fixed Income Investments-I 09/Apr/11 Sat CFA-Level-I Fixed Income Investments-II 10/Apr/11 Sun CFA-Level-I Derivatives-I 16/Apr/11 Sat CFA-Level-I Derivatives-II Alternative Investments + 17/Apr/11 Sun CFA-Level-I Portfolio Mgmt 23/Apr/11 Sat CFA-Level-I Economics-I 24/Apr/11 Sun CFA-Level-I Economics-II 30/Apr/11 Sat CFA-Level-I Economics-III * Indicative list – Subject to Change www.edupristine.com

Seminar Material Not for SaleHow it works? 1 2 3 4 5 You signup for the program by making payment of USD 1000* www.edupristine.com

Seminar Material Not for SaleHow it works? 1 2 3 4 5 Start Preparation with material and Live Interactive Class www.edupristine.com

Seminar Material Not for SaleHow it works? 1 2 3 4 5 Work on the Problem sets/ Quizzes adapting preparation Style www.edupristine.com

Seminar Material Not for SaleHow it works? 1 2 3 4 5 Give Mock Tests/ Ask Doubts/ Revise and Complete Preparation www.edupristine.com

Seminar Material Not for SaleHow it works? 1 2 3 4 5 Plan and Achieve Success in CFA Level I Exam www.edupristine.com

Seminar Material Not for SaleMethodology Each topic will be explained through Conceptual Discussion, Examples, Tests, Quizzes, Actionable Presentations, Visualized Charts and Q&A www.edupristine.com

Seminar Material Not for SaleWhat to expect at the end? Towards the end of School for CFA Prep* You will be able to learn the topics related to CFA Level I Exam You will know how to solve the questions asked in CFA Level I Exam You will get an industry perspective of the topics You will get a certificate of participation *assuming you follow the program and practice www.edupristine.com

Seminar Material Not for SaleAbout the Program 100 hours of Active Learning & Networking Venue: Online Starting Date: 19 Feb, 2011 www.edupristine.com

Seminar Material Not for SaleCost of the Program USD 995 USD 795 For individual registrations For participants joining in groups of 5 or more www.edupristine.com

Seminar Material Not for SaleContact Details Questions & Doubts? Please e-mail me at paramdeep@edupristine.com or visit http://www.edupristine.com or call +91 989 298 0608 www.edupristine.com

Seminar Material Not for Sale To Register • Wire Transfer – Bank Name: HDFC Bank – Country: India – Swift Code: HDFCINBB – Account Name: Neev Knowledge Management Pvt Ltd – Account Number: 00602560008449 • Paypal to Paypal (Preferred) – Create a Personal paypal account (it is free) – After Logging in, click on tab "My Account" and then on "Profile". Link Paypal account with your credit card or bank account – Click on the tab "Send Money" – In the "To" tab enter the email id - pristinecareers@eneev.com – Pay the fees as per package required. • Credit Card to Paypal – You can make the payment from your credit card to Paypal account. – Please make the payment to email id - pristinecareers@eneev.com© Neev Knowledge Management – Pristine www.edupristine.com

Seminar Material Not for Sale Other Pristine Offerings Course Classroom Online Content Crash Hours of Accreditation Price Trainings Trainings Course/ Training Mock Test CFA Level I All* + Yes Original Yes 100 Under Process USD 1000; Singapore** INR 17,950 CFA Level II Mumbai, Delhi From 2010 Original From 2010 80 Under Process USD 1000; INR 16,950 FRM Level I All + Yes Original Yes 75 GARP USD 495; Singapore INR 12,950 FRM Level II Mumbai, Delhi Yes Original Yes 60 GARP USD 495, INR 9,950 PRM All + Yes Original Yes 135 PRMIA USD 795, Singapore INR 20,000 APRM Corporate From 2010 Original Yes 80 PRMIA INR 10,000 Financial Mumbai, Delhi, Yes Original NA 50 - INR 18,000 Modeling Bangalore Finance for Mumbai No Original NA 50 - INR 45,000 Lawyers CFP Mumbai, Delhi Yes Original NA 120 Under Process INR 20,000 Placement Colleges No Original NA 150 Not Required INR 12,000 Oriented Training *All cities include Mumbai, Delhi, Kolkata, Chennai, Bangalore, Pune and Hyderabad ; ** Singapore class room trainings to commence from© Neev Knowledge Management – Pristine June 2010 www.edupristine.com

Seminar Material Not for Sale Contact Contact Phone Email Unmesha Tawde +91 982 043 2652 unmesha@edupristine.com Paramdeep Singh +91 989 298 0608 paramdeep@edupristine.com Atul Kumar +91 932 2194 932 atul@edupristine.com© Neev Knowledge Management – Pristine www.edupristine.com

FSA tips for CFA Preparation by Pristine (Annotated)

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FSA tips for CFA Preparation by Pristine (Annotated) Presentation Transcript