Notes, summaries, assignments, exams, and problems for Economy

Balance Sheet: Interpreting Changes

Income Statement: Performance

TCC Multifamily and BSI Analysis

• Why BSI? They possess a strong track record (2002–2010), major clients, over 30 years of experience, and deep staff/client ties. They maintain efficient inventory with a sub-45-day turnover.
• Backlog: A large backlog may signal an inability to meet current demand; always check the contract balance.
• BSI Projections: Projections appeared unrealistic due to even numbers, which looked fabricated.
• TCC Scope: They operate as a multi-family subcontractor specializing in student, senior, and high-rise housing.
• 2011 Industry: The industry was rebounding post-crash with pent-up demand and thawing credit markets.
• $20k Goodwill: This represented brand value, deal urgency, and "Fuck You" money.

Basin Climbing Gym Case Study

Partnerships

Fundamental Accounting Equations

• Assets = Liabilities + Equity
• Net Income = Revenues - Expenses
• Gross Profit = Sales - Cost of Goods Sold (COGS)
• Operating Income = Gross Profit - Operating Expenses
• Income Before Tax = Operating Income ± Non-operating Items
• Net Income = Income Before Tax - Tax Expense
• Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

Cash Flow and Adjusting Entries

• Free Cash Flow = Operating Cash Flow - Capital Expenditures
• Change in Cash = Cash Flow from Operating + Investing + Financing
• Accrued Revenue → Revenue ↑, Receivable ↑
• Accrued Expense → Expense ↑, Payable ↑
• Deferred Revenue → Unearned Revenue ↓, Revenue ↑
• Prepaid Expense → Prepaid Asset ↓, Expense ↑
• Depreciation → Depreciation

Business Entity Fundamentals

• Entities:
  • Natural person (1 owner)
  • Moral person (+2 owners)
• Source of Capital:
  • Private (individuals)
  • Public (state)
  • Mixed (individuals and state)
  • Domestic (Mexicans/national)
  • Foreign
• Act Developed:
  • Trade
  • Manufacturer
  • Service
• Countries Operate:
  • National
  • Multinational
• Purpose:
  • For-profit
  • Non-profit

Financial Reporting Standards (IFRS)

All entities keep accounting records as measured following Financial Reporting Standards (IFRS).

Accounting Definition

Accounting: Methodical and systematic record of the daily operations of an economic entity.

IFRS Ethics Principles

• Integrity: Honest
• Objectivity: No conflict of interests
• Competition: Update knowledge
• Confidentiality
• Professionalism: Comply with laws

Accounting Information Systems

System: Set of elements... Continue reading "Key Business and Accounting Concepts" »

Global Economic Governance and Trade

Globalization (Globalización): The world is more connected for trade, capital, and people crossing borders. Big groups like the OMC (WTO), FMI (IMF), and Banco Mundial (World Bank) help countries trade and provide loans when needed.

International Institutions

• WTO / OMC (Organización Mundial del Comercio): Controls global trade rules.
• IMF / FMI (Fondo Monetario Internacional): Lends money to countries in financial trouble.
• World Bank / BM (Banco Mundial): Provides loans for development projects.

International Trade Balances

• Trade Deficit (Déficit comercial): Occurs when a country imports more than it exports.
• Trade Surplus (Superávit comercial): Occurs when a country exports more than it imports.
• Balance of Payments

Macroeconomic Variables and National Accounts Identities

Key Definitions of Income, Savings, and Consumption

• W: Labor Income Before Taxes
• NOS: Net Operating Surplus (Profits Before Taxes)
• Rg: Government Revenue (Income obtained from public properties)
• Cd: Private Consumption (Household consumption spending)
• Yd: Disposable Income (The sum of all household income in a country, after tax)
• Cg: Current Public Consumption (Government expenditures on current goods and services)
• Ig: Public Investment

Savings and Surplus Components

• Sg: Public Savings
  • Formula: Sg = Rg + Td + Ti - Zg - H - Cg
• Sf: Corporate Savings (Reserves/Undistributed profits)
• GOS: Gross Operating Surplus (Profit of firms)
  • Formula: GOS = Sales - Intermediate Consumption - Salaries
• NOS: Net Operating

Key Business and Economic Terminology

Core Business Definitions

Services

Intangible things that businesses do for consumers that enhance their lives.

Innovation

A new way of doing things.

Online Business

A business that conducts operations by means of the internet.

Outsourcing

Contracting with other companies for services.

Niche

A small, specialized segment of the market based on customer needs discovered through market research.

Corporate Strategy and Structure

Strategic Alliance

Forming a partnership with another company.

Corporate Venture

A new venture started inside a large corporation.

Economic Factors and Resources

Fundamental concepts related to wealth creation and market dynamics:

• For creating wealth.
• Technology has shortened [business cycles].
• Competition

Understanding Financial Instruments

A financial instrument is a contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another. It may be categorized as:

• A financial asset
• A financial liability
• An equity instrument

An entity shall recognize a financial asset or liability on its balance sheet only when it becomes a party to the contractual provisions of the instrument.

Classification of Financial Assets

For valuation purposes, financial assets are classified into the following categories:

• Loans and receivables: Trade and non-trade loans and receivables.
• Held-to-maturity investments: Negotiable debt securities expected to be held until the reimbursement date.
• Held-for-trading investments: Negotiable

Financial & Banking Acronyms

1. ALM: Asset-Liability Management

2. AML: Anti-Money Laundering

3. KYC: Know Your Customer

4. ASBA: Application Supported by Blocked Amount

BSBDA: Basic Savings Bank Deposit Account

5. IFSC: Indian Financial System Code

6. CBS: Core Banking Solution

7. RTGS: Real Time Gross Settlement

8. SLR: Statutory Liquidity Ratio

9. CAR: Cash Adequacy Ratio

10. MSF: Marginal Standing Facility

11. NBFC: Non-Banking Financial Companies

12. PIN: Personal Identification Number

Economic & Regulatory Terms

13. CCEA: Cabinet Committee on Economic Affairs

14. CECA: Comprehensive Economic Cooperation Agreement

15. CEPA: Comprehensive Economic Partnership Agreement

16. DTAA: Double Taxation Avoidance Agreement

17. ECBs: External Commercial Borrowings

18.

What Is a Financial Market?

A financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies, and derivatives.

The Three Types of Financial Markets

1. Money Market

A market where financial securities mature in less than one year.

Purpose: Its primary objective is the lending and borrowing of money.

Key Concepts:

• Short-term: Refers to the duration of securities traded in this market (less than one year).
• Central Banks: Institutions that lend money to commercial banks, which then use those funds to lend to others.
• Commercial Banks: Financial institutions that provide various financial services and handle loans.

2. Credit Market

Definition: A market involved in the... Continue reading "Understanding Financial Markets: Types and Functions" »