Before You Learn to Invest: First Learn Accounting and Corporate Finance

Passing Exams vs. Learning Value Investing
August 7, 2013
4th National HR Conclave Organized by KIIT School of Management, KIIT University in association with NHRDN
August 10, 2013

Before You Learn to Invest: First Learn Accounting and Corporate Finance

Dear Students of Investing: Hello!

You’ll agree that you can’t build a strong house on a weak foundation.

Learning investing is no different. As serious students of Security Analysis and Portfolio Management (aka SAPM), we must have a working familiarity with two basic courses – Financial Accounting and Corporate Finance.

So before we begin with SAPM, let us first revise our basics. These days there are excellent videos available on the internet, which make our task easier. For example, I found these 3 sources to be great for revising corporate finance:

1. Prof. Aswath Damodaran’s Video Lectures

http://www.youtube.com/watch?v=f8UMSWAihnc&list=TLv4AczWMExRA

2. MIT Open Course Ware

http://ocw.mit.edu/courses/sloan-school-of-management/15-401-finance-theory-i-fall-2008/video-lectures-and-slides/

3. Learnerstv

http://www.learnerstv.com/Free-Management-Video-lectures-ltv217-Page1.htm

All three sources are useful. But I think Learnerstv is particularly well-suited for our purposes.

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Task # 1: Watch the 1st videoclip in the Learnerstv series above.

Assignment: What are the top 3 lessons you can draw from it?

Marks: Best responses here will earn bonus marks (internal component)!

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Task # 2: Now watch videoclips #2 to #5 in the Learnerstv series above (also shared in the class).

Assignment: What lessons can you draw from them?

Marks: Best responses will get bonus marks!

27 Comments

  1. varsha says:

    It is an awesome effort being made for us on your part sir,we appreciate your efforts and promise that we definitely will make use of it .

  2. Saurabh Mendiratta says:

    Sir, these links have really cleared some of my basics, which I use to ignore by thinking that I already know, but after going through these videos I realized that foundation is weak, it needs to be re-constructed.

  3. It is really very good video and easily explain the basic of finance……..thank u sir for providing us these videos…we are definitely going to use most of it..

  4. Shiv Kumar Singh says:

    Sir, this material is very useful as it not only makes us easy to understand the basic but also is clearing our basic knowledge about financing and investing …. and in the material i found out many useful ideas which really made me distinguish between the basic fundamental terms .
    Thank you sir for sharing this video with us .

  5. Koustav Laha says:

    It was a nice learning experience. Some of my doubts were cleared through this video.
    1. Role of a manager as a balance between financial market and financial organization, ie to manage the revenue receivables and cash investment in the market. also look for wealth maximization.
    2. Got clear idea about Cash Inflow – Revenue and Cash Outflow – Expenditure.
    3. Investment decision- Where and how to invest. Also for investment from where we can collect cash or revenue.

    Thank you sir …

  6. sumit agarwall says:

    Sir, this video basically provides a brief idea about the role of the financial manger, organizational structure, financial analysis and also about some financial terminology . The video clears my dought about the sources from where one can raise the fund and make the investment. This is a very clear communication were one can easily understand the basics of finance. Thank you sir it benefits me a lot to understand the investment portfolios while investing in a business.

  7. Shivani Moda says:

    sir, this is a very good video which basically explains the following :
    a) organizational structures
    b) Role of financial managers
    c) Common Finance terminologies as in the difference between real and financial assets
    d) Basic finance problems

    Thank you sir this video basically clarified my basic doubt as to what are the general problems a financial manager faces.

  8. Nidhi Sneha says:

    Sir, there are lots of things learned and many things that I have previously learned I got a better explanation for those. Some of the points are: 1. How a financial manager analyzes capital expenditure proposal 2. What is secure capital financing. 3. different financing decisions and problems faced during taking these decisions such as focus should be on cash flow instead of accruals, risk associated with future cash flows.

  9. Sanchari Das Gupta says:

    Sir. this video gives us a holistic view about the financial market and its operations.
    The important points are a) overview of market structure b)role of financial managers while doing financial analysis of the organization and c)the various aspects they need to consider while taking financial decisions.

  10. varsha says:

    The second lecture was very interesting to me because it was a recap of what we have learnt earlier relating to time value of money,it helped me to brush it up again because learning through text books would have been tedious but video eased it all.
    The valuable learning to me was relating to two other factors except inflation which which affects time value of money,and how we choose our gratification and consumption pattern according to age pattenrs.

    Hope friends you all will also enjoy it.

    • Age indeed plays a key role in decisions about consumption vs saving. Important not only for individual investors but also nation-states (an ageing population like Japan’s vs a young population like India’s).

  11. Tulsi Manjari Mukherjee says:

    Sir, This video is easy to understand and also helped me a lot in clearing some of my basic doubts regarding investment and finance decisions and the problems associated with it. Thank You Sir

  12. Dipti Ranjan Bhoi says:

    From the video I came to know 3 decision:

    1.Investment Decision:
    CF -How much invest & what asset should we invest.
    Cricket- Physical and mental fitness to invest .

    2. Financial Decision :
    CF-How should the cash require for the firm to be raised.
    Cricket-Regular exercise , hard work and regular net practice will help a player to get his focus in batting , bowling and fielding.

    3.Criterion:
    CF-Maximize Value
    Cricket: This help a player to motivate his team mate and win for his team or country. To make the people of a country proud.

    Corporate Finance as per sport : Making strategy to win ( long term or short term ) any format of game, to make the team , people of the country , the sponsors and the managers proud .

  13. varsha says:

    The second video was very useful because it helped to brush up our knowledge which we had learned and the value addition was that i learned about the two other factors affecting the time value of money except inflation and to make the investing decisions according to the gratifications of needs

  14. varsha says:

    The third video was useful because it gave me an insight to reflect my thoughts on how the Present value of money changes when the rate of discounting increases which i had never taken into account,to brief that as the rate of discounting increases the present value of money today earned decreases proportionately and we should always take into account what is the rate of discounting while making investments.It also taught me that there is also a exact mathematical formula to calculate nominal interest rate i.e (1+nom)=(1+real int)*(1+inflation)

  15. Tulsi Manjari Mukherjee says:

    Sir, The video was very easy to understand and it also helped me a lot to clear some of my basic doubts regarding the investment and financing decisions. it also increased my knowledge on concepts of real and financial assets and cash flows. Thank You Sir.

  16. Madhurima kiran says:

    Sir, the first video is very good and the 3 lessons that could be drawn are
    1. The working of the financial manager between the firm’s operation and financial market.
    2. The role of the financial manager in the firm itself (Such as to prepare the financial statements and depict the result) and as an intermediary between the firm’s operation and the financial market (Such as deciding upon the sources of financing).
    3. The three financial decisions and the factors affecting it. ( such as it is clear from the video that while taking these decisions most of the companies do not take non-cash values/social values into consideration.

  17. Ravi Kumar says:

    First of all thank you sir for providing us with all these resources through which we could be able to grab
    almost core of basic corporate finance.Now what i understood from the video,well as there are many things to talk about but just few things specifically:
    1.Basic role of financial manager- raising funds, generating funds from operations, reinvesting the cash etc.
    2.REAL ASSETS: Physical Capital, inventory
    FINANCIAL ASSETS: cash
    CAPITAL MARKETS: where firm goes to raise funds.
    INVESTMENT: new investment
    FINANCING: Support its organization
    3.Time Value Of Money- Logically it says, money is worth more the sooner it is received. TVM depends on inflation, Opportunity for investment and time preferred.
    Calculation of Present value and discounting, future value and interest accumulation through EXCEL spreadsheet is much more easier than to remember formulas.
    4.Real and Nominal- Relationship is: REAL rate is nothing but NOMINAL rate(basic) less the INFLATION rate.

    • Excellent! The 3rd point about Time Value of Money is new. Also, unbelievably important. One correction though – Nominal is NOT = Real + Inflation. The relationship uses multiplication – refer to Varsha’s comments…

      2 bonus points, Ravi!

  18. Great! Do watch the other videos in the series too.

  19. Bikash Mallick says:

    Sir, if we see the role of financial manager, there are many in numbers starting from making financial decisions to making investment plans, but if we talk about the revenue maximization, how a finance manager is effective to do marketing job as well as price setting as mentioned in the first video, next if i move on to Bond and stock valuation we find several parameters given to choose a stock or bond which is definitely good but it should have been mentioned how the stock price is forecast, it has given with pre determined future forecast values but it would have been better if it had shown some of the factors of increasing a stock price…..Overall the videos are absolutely value additional…..thankyou !!!!!

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