Assessing Cash Flow Quality

• Read quality of cash flows
• Non-cash items that affect cash flow
• Identify gaps between cash flow and net profit

Module 2: Financial Statement Analysis & Fraud Detection

How to Read Financial Statements

• Examine cash flow and net profit
• Guidelines for fraud detection
• Measure companies against industry benchmarks

Project Company Profitability

• Measure profitability and balance sheet ratios
• Apply key financial ratios

Identify Salient Accounting Standards

• Detect aggressive accounting
• Identify types of financial engineering

Detect Potential Fraud

• Aggressive revenue recognition
• Inflation of assets and revenue

Economics

In theoretical economics, investment is the purchase (and therefore production) of capital goods – goods that are not consumed but rather used for future production.Examples include building railways, or factories, cleaning the land, or putting yourself through college.Strictly speaking, investment in the formula GDP=C+I+G+NX is also a part of GDP.In that respect, the function of investment is divided into non-residential investment (such as factories, machinery, etc.) and residential investment (new houses).From the correlation of I= (Y, I) we can see that investment is closely related to income and interest rates.Higher incomes will encourage higher investment, but higher interest rates will discourage it because borrowing becomes more expensive.Even if a business chooses to invest its own money, the interest rate represents the opportunity cost of investing that money rather than the interest on lending it out.

Financial aspect

In finance, investing means buying securities or other financial or paper assets.Valuation is a method of estimating the value of a potential investment.Types of investments include real estate, portfolio investments, gold, foreign currencies, bonds and stamps.These investments may then provide future cash flows, or they may increase or decrease in value.Investments in the stock market are performed by portfolio investors.

The securities investment

Securities investment refers to the investment behavior and process in which investors (legal persons or natural persons) purchase securities such as stocks, bonds, funds and derivatives of securities in order to obtain dividends, interest and capital gains. It is an important form of indirect investment.

1. Securities investment principles

Principle of the best combination of benefit and risk:

The best combination of benefit and risk means to maximize the return as much as possible under the certain risk.Or the risk is minimized under the premise of certain return;

Investment diversification principles:

Diversification of securities to establish a scientific and effective securities portfolio;

Rational investment principles:

Securities investment in the analysis, comparison after prudent investment.

2. Open a securities investment account

For securities investment, we need to apply for the corresponding investment and financial account in a large-scale securities company with full business license.Finance and investment accounts can be applied to stock (including A shares, B shares and H shares, etc.), bonds (including Treasury bonds, corporate bonds, corporate bonds, etc.), futures (including financial futures, such as stock index futures, foreign exchange futures, binary options such as metal such as Meetrader, commodity futures, futures of agricultural products, etc.) and so on A series of financial instruments to invest in securities.The opening of securities account can be handled in the business department of each securities company, need to be handled within the trading day.

3. The role of securities investment

(1) Securities investment provides an important channel for the society to raise funds, is an effective way for all kinds of enterprises to direct financing;

(2) Securities investment is conducive to regulating the investment of funds, improve the efficiency of the use of funds, so as to guide the reasonable flow of resources, to achieve the optimal allocation of resources;

(3) Securities investment is conducive to improving enterprise management, improve enterprise economic efficiency and social visibility, promote enterprise behavior rationalization;

(4) Securities investment for the central bank for financial macro-control provides an important means for the sustained and efficient development of the national economy has important significance.

Investment club

An investment club is a group that meets frequently for the purpose of investing money, usually in stocks and other publicly traded securities.The emergence of various web groups devoted to this type of investment has contributed to a boom in private investment in the United States.

To invest in overseas

For China’s high net worth investors, due to the sharp volatility of the stock market and macro-control of the housing market, the investment strategy based on stocks and real estate has become increasingly difficult to achieve good investment returns in the past few years.

Compared with foreign markets, China’s stock market is unable to achieve the absolute returns of overseas hedge funds due to the lack of a mature hedging mechanism based on short selling and leverage.Second, due to the lack of regulation, the problem of insider trading in China’s stock market is serious, and individual investors without insider information are at an obvious disadvantage in the stock market trading.Thirdly, due to the irrationality of the listing mechanism, the stock market often becomes a channel for listed companies to collect money and lacks the value of long-term investment.Finally, the lack of independent supervision of domestic financial audit companies is likely to cause financial fraud of listed companies, which further increases the risk of long-term investment in the stock market.

The rapid growth of housing prices in the past few years has forced the government to step up macro-control measures to curb speculation in the property market.The era of windfall profits in Chinese real estate investment is over.So high net worth individuals are moving away from housing and looking at other investment options.Overseas investment has become the choice of many high net worth investors in recent years for a number of reasons:

1. The pursuit of absolute return on investment;

2. Internationalization of asset allocation;

3. Dispersed asset allocation;

4. Security of assets;

5. Immigration;

6. Children studying abroad;

7. Overseas property purchase for the purpose of leisure and vacation;

8. Enjoy low interest rates on overseas loans.

As a possible overseas investor, one must first answer the question about the purpose of investing overseas.

Characteristics of the editor

1. An investment is another asset exchanged for the transfer of another asset;

2. Investment is an asset held by an enterprise outside the production and operation process;

3. Investment is an asset in the form of rights;

4. Investment is an asset with financial risk.

5, the investment cycle is very long for 5 to 10 years, not long is called speculation.