https://gdpark.blog/series/cfa-level-1-notes/Recent content in CFA Level 1 Notes on gdpark.blogHugoenSun, 13 Feb 2022 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-01-balance-sheet/Wed, 31 Mar 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-01-balance-sheet/Kicking off the FRA grind from absolute zero — what Financial Reporting Analysis even is, why accounting matters, and a first peek at the balance sheet.https://gdpark.blog/posts/cfa-l1-01-introduction/Wed, 31 Mar 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-01-introduction/Kicking off a weekly series to transcribe my CFA class notes — maybe with a backtest or two — on a heroic 30-min-a-day schedule. Fighting!!!!https://gdpark.blog/posts/cfa-l1-02-income-statement-and-cash-flow-statement/Thu, 08 Apr 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-02-income-statement-and-cash-flow-statement/Quick rundown of the income statement — what it shows, why revenue ≠ profit, and why accountants split out discontinued operations so shareholders don’t get played.https://gdpark.blog/posts/cfa-l1-03-accrual-accounting/Sun, 11 Apr 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-03-accrual-accounting/A casual breakdown of why accrual accounting exists — from the ‘does undelivered revenue count?’ dilemma to how GAAP, IFRS, and K-IFRS all fit together.https://gdpark.blog/posts/cfa-l1-04-inventories-1-acquisition-cost/Fri, 16 Apr 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-04-inventories-1-acquisition-cost/We kick off our B/S line-item series with inventories — what they are, how acquisition cost first hits the books, and the cash-vs-credit purchase breakdown.https://gdpark.blog/posts/cfa-l1-05-inventories-2-cost-flow-assumptions/Thu, 22 Apr 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-05-inventories-2-cost-flow-assumptions/When prices and quantities change every single time you buy, you need a cost flow assumption — here’s the rundown on FIFO, LIFO, weighted average, and perpetual vs. periodic.https://gdpark.blog/posts/cfa-l1-06-inventories-3-lifo-reserve/Sun, 02 May 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-06-inventories-3-lifo-reserve/A casual walkthrough of how FIFO vs. LIFO choices ripple through key financial ratios — liquidity, solvency, and activity — before diving into the LIFO reserve.https://gdpark.blog/posts/cfa-l1-07-inventories-4-lower-of-cost-or-market-lcm/Sun, 09 May 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-07-inventories-4-lower-of-cost-or-market-lcm/We plug the last inventory gap: when year-end hits, unsold stock on the B/S gets valued at whichever is lower — historical cost or market value — that’s the LCM method.https://gdpark.blog/posts/cfa-l1-08-property-plant-and-equipment-1-acquisition/Sun, 16 May 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-08-property-plant-and-equipment-1-acquisition/We kick off long-lived assets by diving into PP&E acquisition — what counts as an asset, why it’s not just an expense, and how initial recognition works.https://gdpark.blog/posts/cfa-l1-09-property-plant-and-equipment-2-depreciation/Sun, 23 May 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-09-property-plant-and-equipment-2-depreciation/A casual breakdown of accounting depreciation for PPE — turns out it’s about spreading costs over useful life, not just saying an asset lost value.https://gdpark.blog/posts/cfa-l1-10-property-plant-and-equipment-3-revaluation-model/Sat, 29 May 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-10-property-plant-and-equipment-3-revaluation-model/IFRS lets you pick the Revaluation Model for PPE — and here’s why that’s a big deal (and a headache) compared to just sticking with the Cost Model.https://gdpark.blog/posts/cfa-l1-11-property-plant-and-equipment-4-impairment/Sat, 29 May 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-11-property-plant-and-equipment-4-impairment/Breaks down PPE impairment — what ‘gone bad’ actually means, how US-GAAP’s two-step recovery test works, and where IFRS handles things differently.https://gdpark.blog/posts/cfa-l1-12-investment-property/Sun, 06 Jun 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-12-investment-property/Investment property is just rental real estate — not speculation — and here’s how it differs from PPE under IFRS (spoiler: US GAAP doesn’t even have this account).https://gdpark.blog/posts/cfa-l1-13-intangible-assets/Sat, 12 Jun 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-13-intangible-assets/A breakdown of intangible assets — what they are, how they stack up against PP&E, and the surprisingly messy rules for getting them onto the B/S.https://gdpark.blog/posts/cfa-l1-14-income-tax-expense/Sat, 19 Jun 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-14-income-tax-expense/Breaking down how corporate tax expense actually works — from taxable income reconciliation to current vs. deferred tax — purely from the CFA angle, heh.https://gdpark.blog/posts/cfa-l1-15-effective-interest-rate-method-a-complete-accounting-guide/Sat, 03 Jul 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-15-effective-interest-rate-method-a-complete-accounting-guide/Breaking down the effective interest rate method and amortized cost from the issuer’s side — because honestly, I had to fully get it myself before I could explain it!https://gdpark.blog/posts/cfa-l1-16-bonds/Sun, 25 Jul 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-16-bonds/Cruising through bonds for CFA prep — par, discount, and premium bonds, how market interest rates set the price, and how it all lands on the financial statements.https://gdpark.blog/posts/cfa-l1-17-leases/Sat, 31 Jul 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-17-leases/A quick rundown of lease types and lessor/lessee basics you need to know — even though leases are basically gone from CFA Level 1 now, heh heh heh.https://gdpark.blog/posts/cfa-l1-18-pension/Sat, 07 Aug 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-18-pension/Quick intro to post-employment benefits and why you can’t just slap a retirement payout on the I/S all at once — matching principle, retirement allowance systems, and more.https://gdpark.blog/posts/cfa-l1-19-financial-ratios-1-financial-analysis-techniques/Fri, 13 Aug 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-19-financial-ratios-1-financial-analysis-techniques/A breezy intro to why financial ratios are surprisingly tricky — cross-company comparisons, IFRS vs US-GAAP headaches, the Samsung problem, and whether a 200% debt ratio is even bad.https://gdpark.blog/posts/cfa-l1-20-financial-ratios-2-financial-analysis-techniques/Sat, 21 Aug 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-20-financial-ratios-2-financial-analysis-techniques/Part 2 of financial ratios — breaking down liquidity ratios like the Current, Quick, Cash, and Defensive Interval ratios with actual intuition, not just exam memorization.https://gdpark.blog/posts/cfa-l1-21-dupont-analysis/Fri, 27 Aug 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-21-dupont-analysis/DuPont Analysis is basically about ripping ROE apart into three pieces — Net Profit Margin, Asset Turnover, and Financial Leverage — so each one actually means something.https://gdpark.blog/posts/cfa-l1-22-financial-assets-and-accounts-receivable/Sun, 19 Sep 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-22-financial-assets-and-accounts-receivable/Back to the B/S! We dig into financial assets, break down non-derivative instruments, and learn why the classic maturity-date rule for debt vs. equity doesn’t always hold up.https://gdpark.blog/posts/cfa-l1-23-equity/Sun, 26 Sep 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-23-equity/A casual (expectations: low!) walkthrough of equity on the balance sheet — paid-in capital, par value, share premium, and just enough accounting cycle to get by for the CFA exam.https://gdpark.blog/posts/cfa-l1-24-statement-of-changes-in-equity-and-non-recurring-items/Sat, 02 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-24-statement-of-changes-in-equity-and-non-recurring-items/A breezy tour of the Statement of Changes in Equity, then a quick rundown on bad debt and warranty expense — and how both quietly create DTAs on the B/S.https://gdpark.blog/posts/cfa-l1-25-cash-flow-statement/Mon, 11 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-25-cash-flow-statement/We finally made it to the cash flow statement — why it exists, why accrual alone isn’t enough, and how CFO/CFI/CFF each tell a different part of the story.https://gdpark.blog/posts/cfa-l1-25-earnings-per-share-eps/Sun, 03 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-25-earnings-per-share-eps/Breaking down EPS the CFA way — weighted average shares, preferred stock deductions, and why dilutive securities make the whole thing a little messy.https://gdpark.blog/posts/cfa-l1-26-cash-flow-statement-and-ebitda/Sat, 16 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-26-cash-flow-statement-and-ebitda/Working through a real B/S and I/S to build a Cash Flow Statement step by step — tagging every line item as O, I, or F and smashing out CFI, CFF, and CFO the direct way.https://gdpark.blog/posts/cfa-l1-27-free-cash-flow-and-fra-wrap-up/Sun, 17 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-27-free-cash-flow-and-fra-wrap-up/Finally putting a period on FRA with a casual-but-essential look at FCFF and FCFE — what they are, how to build them from net income, and why WACC is the right discount rate.https://gdpark.blog/posts/cfa-l1-28-what-is-a-bond-the-fundamental-difference-from-equity/Sun, 24 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-28-what-is-a-bond-the-fundamental-difference-from-equity/Kicking off Fixed Income for CFA Level 1 — what a bond actually is, why interest is called a coupon, and how it’s fundamentally different from a stock.https://gdpark.blog/posts/cfa-l1-29-types-of-bonds/Sun, 31 Oct 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-29-types-of-bonds/A quick rundown of bond types by how they pay interest — floaters, inverse floaters, PIK bonds, index-linked, and the contingency provisions baked right in.https://gdpark.blog/posts/cfa-l1-30-key-fixed-income-terminology/Sun, 05 Dec 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-30-key-fixed-income-terminology/A casual rundown of fixed income exam keywords — LIBOR, bond issuance methods, underwritten vs. best efforts offerings, primary dealers, and shelf registration.https://gdpark.blog/posts/cfa-l1-31-bond-valuation/Sun, 12 Dec 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-31-bond-valuation/Bond valuation is just PV of future cash flows — once you lock in why price adjusts to match required return, the rest of fixed income stops wrecking your mental health. heh heh!!https://gdpark.blog/posts/cfa-l1-32-yield-measures/Sun, 19 Dec 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-32-yield-measures/Breaking down why coupon rate isn’t your bond’s ’true’ yield, and how payment frequency changes everything when you’re comparing bonds apple to apple.https://gdpark.blog/posts/cfa-l1-33-understanding-geometric-mean-return-for-the-yield-curve/Sat, 25 Dec 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-33-understanding-geometric-mean-return-for-the-yield-curve/Finally tackling the yield curve — but first, why geometric mean return (not arithmetic mean) is the only correct way to think about % gains over time.https://gdpark.blog/posts/cfa-l1-34-yield-curve/Sat, 25 Dec 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-34-yield-curve/Finally cracking open the yield curve — spot rates, zero coupon bonds, and why discounting everything at one single yield is kinda ridiculous.https://gdpark.blog/posts/cfa-l1-35-yield-spread/Fri, 31 Dec 2021 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-35-yield-spread/A casual breakdown of yield spreads — what G-spread and I-spread actually mean, why swap rates beat LIBOR as the private-sector risk-free rate, and how traders decide if a bond is cheap or rich.https://gdpark.blog/posts/cfa-l1-36-price-risk-reinvestment-risk-and-duration/Sat, 08 Jan 2022 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-36-price-risk-reinvestment-risk-and-duration/YTM secretly assumes you reinvest every coupon at YTM itself — and that hidden assumption is exactly where price risk and reinvestment risk come from.https://gdpark.blog/posts/cfa-l1-37-credit-analysis-and-credit-ratings/Sun, 23 Jan 2022 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-37-credit-analysis-and-credit-ratings/A breezy skim through credit analysis — cash flow, bond indentures, and why credit loss is basically just lottery math but for money you might lose.https://gdpark.blog/posts/cfa-l1-38-asset-backed-securities-abs-and-the-global-financial-crisis/Sat, 05 Feb 2022 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-38-asset-backed-securities-abs-and-the-global-financial-crisis/ABS, MBS, maturity mismatches, and yes — the full 2008 meltdown with AIG and everything. Buckle up, it’s the grand finale of the Fixed Income series!https://gdpark.blog/posts/cfa-l1-39-fixed-income-wrap-up/Sun, 13 Feb 2022 00:00:00 +0000https://gdpark.blog/posts/cfa-l1-39-fixed-income-wrap-up/Wrapping up the whole Fixed Income series with a keyword-by-keyword tour of securitization, covered bonds, RMBS vs. CMBS, and call protection mechanics.