About This Chapter
Analyzing Investment Portfolios & Financial Statements - Chapter Summary
In these lessons on analyzing investment portfolios and financial statements, you can study different methods of depreciation and the importance of footnotes on financial statements. Expert instructors explain why the statement of changes in equity is used and the patterns conveyed in a cash flow statement. By the end of the chapter, you should be able to:
- Discuss investment account analysis as it relates to product selection
- Recall formulas for calculating alpha and beta in finance
- Outline benefits of using the capital asset pricing model
- List components of an income statement and balance sheet
- Detail why the statement of cash flows is important
- Recount the primary elements of financial statement analysis
- Describe vertical and horizontal balance sheet analysis
- Provide an overview of inventory valuation methods
Our professional instructors provide plenty of examples to help you quickly comprehend concepts related to analyzing investment portfolios and financial statements. Each lesson includes a brief quiz to assess your understanding of the content. You also have the option of printing the quiz to serve as a handy offline study worksheet.
1. Applying Investment Portfolio Analysis to Product Selection
Portfolio analysis is the evaluation of asset combinations and other factors to maximize a portfolio's return. Learn about how portfolio analysis is applied to product selection in this lesson.
2. What is Alpha in Finance? - Definition & Formula
In this lesson, you will learn what alpha is in finance, how it is used to measure return based on risk, and its relationship with beta. You will also learn the formula for calculating alpha.
3. What is Beta in Finance? - Definition & Formula
In this lesson, you will learn what beta is, how it is used in finance, the formula to calculate it, and how to best utilize it for success in investing.
4. Capital Asset Pricing Model (CAPM): Definition, Formula, Advantages & Example
Learn about the Capital Asset Pricing Model (CAPM), one of the foundational models in finance. We'll look at the underlying assumptions, how the model is calculated, and what it can do for you.
5. What Is an Income Statement? - Purpose, Components & Format
There are four financial reports that are created during the accounting cycle. These four reports make up what is commonly known as the financial statements. In this lesson, we will focus our attention on the income statement. We will learn what the income statement is, what its role in the financial statements is, and why it is important in accounting.
6. The Balance Sheet: Purpose, Components & Format
There are four financial reports that make up a group known as the financial statements. We will take a walk with one of those reports - the balance sheet - and learn what it is, what items are included on it and what its role in the group is.
7. Statement of Changes in Equity: Purpose & Examples
Companies must prepare a number of financial statements to comply with accounting regulations. In this lesson, you'll learn about one of these statements, the statement of changes in equity.
8. The Statement of Cash Flows: Purpose, Format & Examples
There are four financial reports that are required in financial statements. In this lesson, you will learn about the fourth and final report - the statement of cash flows. You'll learn what the makeup of the statement is, its purpose, and why it is important to users of the financial statements.
9. Analyzing Cash Flow Statement Patterns
The cash flow statement identifies where a company obtained and used cash during a specified period of time. In this lesson, we analyze the patterns conveyed by this statement.
10. Financial Statement Analysis: Definition, Purpose, Elements & Examples
In this lesson, we'll define financial statement analysis and discuss the main categories. You'll also learn how to calculate a financial ratio in each category and analyze the results.
11. The Purpose of Notes on Financial Statements
Financial statements are very important in accounting and finance. In this lesson, you will learn about notes to the financial statements, what information they may give, and why they are important to financial statement users.
12. Accounting Policies as Balance Sheet Disclosures
In this lesson, you'll learn about accounting policies as disclosures on the balance sheet. We'll also discuss why footnotes are an integral part of the financial statements.
13. Comparative Statements as Balance Sheet Disclosures
In this lesson, you'll learn if a comparative balance sheet is required and in what order the balance sheets must appear. You will also be introduced to horizontal and vertical balance sheet analysis.
14. Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average
This lesson introduces you to the cost flow assumption methods of specific identification: FIFO, LIFO, and weighted average. You will also learn how to compute inventory in a perpetual system using the methods of FIFO, LIFO, and weighted average.
15. Methods of Depreciation
After watching this video lesson, you will understand the differences between the different depreciation methods that are available to you. We will discuss three different methods depending on how you use the equipment that you want to calculate the depreciation for.
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Other chapters within the Series 6 Exam: Study Guide & Practice course
- Financial Advertising & Communications With the Public
- Describing Investment Products & Services
- Disclosing Financial Account Types & Restrictions
- Understanding Retirement Plans & Tax Advantaged Accounts
- Obtaining Basic Customer Information & Documentation
- Obtaining Customer Investment Profile Information
- Obtaining Supervisory Approvals for Investment Accounts
- Types of Underlying Securities
- Understanding Funds, Trusts & Investment Companies
- Understanding Municipal Fund Securities
- Variable Life Insurance & Annuity Contracts
- Tax Treatment of Investment Profiles
- Disclosing Investment Product Information
- Updating Investment Customers & Retaining Customer Records
- Processing & Confirming Financial Transactions
- Resolving Investment Disputes & Customer Complaints