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.
by the finance major | Feb 19, 2023 | Education, Personal Finance
Day trading is where a person buys and sells stocks, options, or other financial instruments within the same day. The goal is to make a profit by taking advantage of small price movements in the market.
In day trading, a person will buy a financial instrument at one price and then sell it at a higher price, hopefully making a profit. They may do this multiple times throughout the day, buying and selling different financial instruments as the market changes.
Day trading can be extremely risky, as it requires a lot of skill and knowledge to make good trades consistently. It also requires a lot of time and attention, as you need to be constantly monitoring the market to make sure they are making the right trades at the right time.
Overall, day trading can be extremely risky and is not generally recommended. It’s important to do your research and understand the risks before getting involved.
If you’re looking to get some practice, consider checking out Webull. It’s a trading simulator where you can test your strategies risk-free and commission-free.
Check out this post for recommended books on general investing.
by the finance major | Feb 19, 2023 | Education, Personal Finance
A share of stock represents ownership in a single company, which means that when you buy a share of stock, you are buying a small piece of that company. If the company performs well and its profits increase, the value of the stock may go up, and you may be able to sell it for more than you paid for it. However, if the company does not perform well, the stock may decrease in value, and you may lose money if you sell it.
An ETF, or exchange-traded fund, is a type of investment that pools together money from many investors to buy a basket of different stocks, bonds, or other assets. When you invest in an ETF, you are buying a small piece of the entire pool of assets, which means that your investment is spread across many different companies. The value of your investment in the ETF goes up and down depending on how well the underlying investments in the fund are doing.
The main difference between a share of stock and an ETF is the level of diversification and risk involved. When you invest in a share of stock, you are only investing in one company, which means that your investment is concentrated in that one company. With an ETF, you are investing in many different companies, which means that your investment is diversified and spread out across multiple companies. This can help reduce the risk of losing money if one company performs poorly.
In short, a share of stock represents ownership in a single company, while an ETF represents a basket of investments spread across multiple companies, providing diversification and potentially reducing risk.
Check out this post for recommended books on general investing.
by the finance major | Feb 19, 2023 | Education, Fun
There are many well-known people in the finance industry, from successful investors and entrepreneurs to influential economists and policymakers. Here are some of the most famous names in finance:
1. Warren Buffett – billionaire investor, CEO of Berkshire Hathaway
2. Jamie Dimon – CEO of JPMorgan Chase, one of the largest banks in the US
3. Lloyd Blankfein – former CEO of Goldman Sachs, one of the largest investment banks in the world
4. Janet Yellen – former Chair of the Federal Reserve, the central banking system of the US
5. Ray Dalio – billionaire hedge fund manager, founder of Bridgewater Associates
6. Christine Lagarde – President of the European Central Bank, former Managing Director of the International Monetary Fund
7. George Soros – billionaire investor, founder of Soros Fund Management
8. Paul Volcker – former Chair of the Federal Reserve, credited with ending the high inflation of the 1970s
9. Benjamin Graham – economist and investor, author of “The Intelligent Investor” and mentor to Warren Buffett
10. Michael Bloomberg – billionaire businessman and politician, founder of Bloomberg LP and former mayor of New York City.
by the finance major | Feb 17, 2023 | Education
Financial modeling is a technique used to make predictions about financial outcomes. It’s a big math problem where you use data and formulas to make projections about what might happen in the future.
A financial model might be used to help a company decide whether to invest in a new project, or to help a bank decide whether to make a loan to a borrower. The model takes into account various factors, such as the cost of the project, the potential revenue it could generate, and the risks involved.
To build a financial model, you first need to gather data and information about the thing you want to model. This might include things like historical financial statements, market data, and industry trends. You then use this information to create a set of assumptions and formulas that can be used to make predictions.
The most common tool used to build financial models is Microsoft Excel. Excel allows you to create formulas and equations that can be used to analyze and manipulate data. Once you have created a model in Excel, you can use it to run various scenarios and see how changes in different factors might impact the outcome.
Modeling allows you to make informed decisions based on data and projections, and can help you understand the potential risks and rewards of a particular investment or business venture.
Check out what a Discounted Cash Flow (DCF) model looks like at a high-level: DCF Example
by the finance major | Feb 17, 2023 | Education
The U.S. Treasury is a government agency that manages the country’s finances. Its main role is to oversee the collection of taxes, the issuance of government debt, and the management of the federal government’s finances.
Some functions of the Treasury include:
Collecting taxes: The Treasury is responsible for collecting taxes from individuals and businesses. It also enforces tax laws and investigates cases of tax evasion.
Managing the federal budget: The Treasury prepares the federal budget and works with Congress to get it approved. It also manages the government’s spending and works to ensure that the government has enough money to meet its obligations.
Issuing government debt: The Treasury issues a variety of securities, including Treasury bonds, notes, and bills, to finance the government’s operations. These securities are bought by investors, including individuals, banks, and foreign governments.
Enforcing financial sanctions: The Treasury has the power to impose economic sanctions on foreign governments and individuals who pose a threat to national security or engage in illegal activities.
Protecting the U.S. financial system: The Treasury works to prevent financial crimes, such as money laundering and terrorism financing. It also regulates financial institutions to ensure they are operating safely and soundly.
Overall, the U.S. Treasury plays a critical role in managing the country’s finances and ensuring the stability of the financial system.
