by the finance major | Feb 20, 2023 | Education
In the late 1990s, there was a period of rapid growth in the technology industry, and many new internet companies were created. Investors were very excited about these companies and believed they would become extremely valuable in the future. People started investing a ton of money in these companies, even if they didn’t have a proven business model or weren’t making any profits.
This led to a lot of speculation and hype around these companies, and their stock prices began to rise exponentially. Some companies even went public in initial public offerings (IPOs), and their stock prices soared even higher.
However, the bubble burst in 2000, as investors began to realize that many of these companies were not making any profits, and their stock prices were based on hype and speculation rather than sound financial fundamentals. Many companies went bankrupt, and their stock prices plummeted. This caused a lot of people to lose a lot of money, and it had a ripple effect on the broader economy.
The dot com bubble crash was a lesson in the dangers of speculation and investing in companies without a proven business model or sound financial fundamentals. It showed that it’s important to do your research and invest wisely, rather than following hype and speculation. As Warren Buffet wisely said, “be fearful when others are greedy, and greedy when others are fearful.”
Check out this list of companies that flopped during this time.
by the finance major | Feb 19, 2023 | Career, Education
In the finance industry, the term “front office” refers to the parts of a firm that directly generate revenue through interactions with clients. This can include functions like sales, trading, and investment banking. In general, front office roles are focused on generating revenue for the firm and often involve working closely with clients to help them make investment decisions or execute transactions.
Front office roles are often seen as prestigious and highly competitive, as they can be very lucrative and offer a lot of opportunities for professional development. However, they can also be high-pressure and require a lot of hard work and long hours. Some examples of front office roles in finance include:
- Sales: Sales professionals work with clients to identify their needs and sell them financial products like stocks, bonds, and derivatives.
- Trading: Traders buy and sell financial assets in order to make a profit for their firm or their clients.
- Investment banking: Investment bankers help companies raise money by underwriting and issuing securities like stocks and bonds, and they also provide advisory services for mergers and acquisitions, corporate finance, and other strategic transactions.
Front office roles are critical to the success of financial firms, and they are a key area of focus for many professionals in the industry.
For an explanation of Back Office vs. Middle Office, click here.
by the finance major | Feb 19, 2023 | Career, Education
In the finance industry, there are two main sides of the business: the Buy Side and the Sell Side.
The Sell Side refers to banks, brokerage firms, and other financial institutions that sell financial products and services to their clients. This can include things like investment research, underwriting, and market-making. Essentially, the Sell Side helps clients buy and sell financial assets.
The Buy Side, on the other hand, refers to institutional investors like pension funds, hedge funds, and private equity firms that buy and hold financial assets. These investors are looking to generate returns on their investments by buying and holding securities like stocks, bonds, and other financial instruments.
So, to summarize, the Sell Side helps clients buy and sell financial assets, while the Buy Side actually buys and holds those assets in order to generate returns for their investors.
Many professionals work on both sides over the course of their careers.
by the finance major | Feb 19, 2023 | Career
The “Big 4” refers to the four largest accounting firms in the world, which are Deloitte, PwC (PricewaterhouseCoopers), EY (Ernst & Young), and KPMG (Klynveld Peat Marwick Goerdeler). These firms are international in scope and offer a wide range of services, including audit, tax, consulting, and advisory services to clients in various industries.
While all four firms provide similar services, there are some slight differences between them. For example:
- Deloitte is known for its consulting services and its work with large public sector organizations, including governments and non-profits.
- PwC is known for its expertise in tax and audit services and has a large presence in the financial services industry.
- EY is known for its global reach and its work in areas like assurance, tax, transaction, and advisory services.
- KPMG is known for its audit and tax services and has a strong presence in the financial services and healthcare industries.
Overall, the differences between the Big 4 firms are subtle, and they are all highly regarded in the accounting and consulting industries. Many people choose to work at these firms early in their careers as a way to gain public accounting experience for the CPA designation, as well to build their professional networks.
Click here for more information about the CPA Exam.
Check out the Resources page for CPA Exam prep!
by the finance major | Feb 19, 2023 | Education
There are three main financial statements that companies use to report their financial performance: the income statement, the balance sheet, and the cash flow statement.
The income statement, also known as the profit and loss statement, shows how much money the company earned and how much it spent during a specific period of time. This statement includes the revenue the company earned from selling its products or services, as well as the expenses it incurred to generate that revenue, such as salaries, rent, and cost of goods sold. The bottom line of the income statement shows the company’s net income, which is the amount of profit or loss it made during that period.
The balance sheet shows the company’s financial position at a specific point in time. It lists all of the company’s assets, such as cash, property, and equipment, as well as its liabilities, such as loans and accounts payable. The difference between the company’s assets and its liabilities is its equity, which represents the portion of the company that belongs to its owners.
The cash flow statement shows how the company’s cash balance changed during a specific period of time. It includes the cash the company generated from its operations, such as collecting payments from customers, as well as the cash it spent on things like inventory, equipment, and salaries. The cash flow statement is important because it shows how much cash the company has available to pay its debts and invest in future growth.
