Pieter Slegers

CFA Cheat Sheet

An overview with all formulas

The 10 most important formulas?

1. Net Present Value (NPV)
2. Internal Rate of Return (IRR)
3. Weighted Average Cost of Capital (WACC)
4. Capital Asset Pricing Model (CAPM)
5. Sharpe Ratio
6. Modified Duration
7. Dividend Discount Model (DDM)
8. Black-Scholes Model (for option pricing)
9. Fama-French Three-Factor Model
10. Gordon Growth Model (a version of the DDM)

Source: Wall Street Notes

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Financial Statements

Master the financial statements of any business

Here's what you'll learn:
• Financial reporting
• Balance statements
• Income statements
• Statement of cash flows
• Statement of Retained Earnings
• Ratios
• Financial Analysis

Source: PDH Center

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CFA 101

The 15 most important concepts in one PDF

Here’s what you’ll learn:
• Time value of money
• Discounted cash flow
• Risk and return
• Portfolio diversification
• Capital asset pricing model
• Efficient market hypothesis
• Financial statement analysis
• And more!

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Financial Ratios Handbook 👇

This is a compilation that includes...

✳️ Profitability Ratio
A. Return
Return on Equity
Return on Assets
Return on Capital Employed

B. Margin
Gross Margin Ratio
Operating Profit Margin
Net Profit Margin

✳️ Leverage Ratio
Debt-to-Equity Ratio
Equity Ratio
Debt Ratio

✳️ Efficiency Ratio
Accounts Receivable Turnover Ratio
Accounts Receivable Days
Asset Turnover Ratio
Inventory Turnover Ratio
Inventory Turnover Days

✳️ Liquidity Ratio
A. Asset
Current Ratio
Quick Ratio
Cash Ratio
Defensive Interval Ratio

B. Earnings
Times Interest Earned Ratio

C. Cash Flow
Times Interest Earned (Cash Basis) Ratio
CAPEX to Operating Cash Ratio
Operating Cash Flow Ratio

✳️ Valuation Ratio
A. Price
Price-to-Earnings Ratio

B. Enterprise Value
EV/EBITDA Ratio
EV/EBIT Ratio
EV/Revenue Ratio

Source: Yashika Vatsa

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80 Great investing books

Here are my favorite ones:

- Stocks for the Long Run by Jeremy Siegel
- The Most Important Thing by Howard Marks
- The Intelligent Investor by Benjamin Graham
- One Up On Wall Street by Peter Lynch
- The Outsiders by William Thorndike
- The Boglehead’s Guide to Investing by Mel Lindauer
- The Alchemy of Finance by George Soros
- Margin of Safety by Seth Klarman
- The Little Book of Value Investing by Christopher Browne
- Common Stocks and Uncommon Profits by Philip Fisher
- The Dhando Investor by Mohnish Pabrai
- Mastering the Cycle by Howard Marks
- Too Big to Fail by Andrew Ross Sorkin
- The Investment Checklist by Michael Shearn
- Deep Value by Tobias Carlisle
- You Can Be a Stock Market Genius by Joel Greenblatt
- A Random Walk Down Wall Street by Burton Malkiel
- The Joys of Compounding by Gautam Baid
- Where Are the Customers' Yachts? by Fred Schwed
- Richer, Wiser, Happier by William Green
- The Man Who Solved the Market by Gregory Zuckerman
- Expectations Investing by Michael Mauboussin
- The Education of a Value Investor by Guy Spier
- Security Analysis by Benjamin Graham
- Reminiscences of a Stock Operator by Edwin Lefevre
- What Works on Wall Street by Jim O’Shaugnessey
- When Genius Failed: The Rise and Fall of LTCM by Roger Lowenstein
- The Big Secret from the Small Investor by Joel Greenblatt
- Seeking Wisdom - From Darwin to Munger by Peter Bevelin
- How to Make Money in Stocks by William O’Neil
- The Four Pillars of Investing by William Bernstein
- Beating the Street by Peter Lynch
- The Art of Execution by Lee Freeman-Shor
- The Little Book that Still Beats The Market by Joel Greenblatt
- The Simple Path to Wealth by JL Collins
- The Smart Money Method by Stephen Clapham
- The Little Book that Builds Wealth by Pat Dorsey
- 100 Baggers by Chris Mayer
- The Little Book of Common Sense Investing by John Bogle
- Five Rules for Successful Stock Investing by Pat Dorsey
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50 Books to change your life

1. How to Talk to Anyone
2. Atomic Habits
3. Rich Dad Poor Dad
4. The 5 AM Club
5. Thinking Fast and Slow
6. The 48 Laws of Power
7. Make Your Bed
8. The Subtle Art of Not Caring
9. How to Win Friend and Influence People
10. Think and Grow Rich
11. The Power of Habit
12. The 7 Habits of Highly Effective People
13. The Power of Positive Thinking
14. 12 Rules for Life
15. The 80/20 Principle
16. The 4-Hour Body
17. Never Get a Real Job
18. Quiet
19. Girl, Stop Apologizing
20. Girl, Wash your Face
21. How to Stop Worrying
22. Act Like a Lady
23. Talking to Strangers
24. Deep Work
25. The Four Agreements
26. The Love Languages
27. Getting Things Done
28. Who Moved My Cheese
29. The 4-Hour Workweek
30. The Power of Now
31. Think and Grow Rich
32. Man's Search For Meaning
33. The Alchemist
34. The Power of Now
35. Awaken the Giant Within
36. The Miracle Morning
37. Sapiens
38. The Power of Habit
39. Outliers
40. The Art of Happiness
41. The Magic of Thinking Big
42. Essentialism
43. 10% Happier
44. Yes You Can!
45. The Lover
46. Zero to One
47. Never Split the Difference
48. Getting to Yes
49. A Kiss Before Dying
50. The Subtle Art of Not Giving a F*ck

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Economic and Investing Principles Cheat Sheet

Every Finance Formula you'll ever need in 1 PDF:

🎯Time Value of Money
🎯 Discounted Cash Flow
🎯Profitability Concepts
🎯Common Probability Distributions
🎯Sampling and Estimation
🎯Technical Analysis
🎯Demand and Supply Analysis
🎯Aggregate Output, Prices and Economic Growth
🎯Understand Business Cycles
🎯Currency Exchange Rates
🎯Financial Statement Analysis
🎯Understanding Cash Flow Statements
🎯Financial Analysis Techniques
🎯Inventories
🎯Long Lived Assets
🎯Income Taxes
🎯Capital Budgeting
🎯Cost of Capital
🎯Measures of Leverage
🎯Dividends and Share Repurchase Basics
🎯Working Capital Management
🎯Portfolio Risk and Return
🎯Market Organization and Structure
🎯Security Market Indices
🎯Equity Valuation
🎯Fixed Income Valuation
🎯Fixed Income Risk and Return

This beautiful document was made by Icici Direct (Centre for Financial Learning).

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Investment Banking vs Asset Management

Here’s what you’ll learn:
• An overview
• Investment banking career path
• Investment banking learning points
• Top investment banks
• Asset management overview
• Asset management career path
• Asset management learning points
• Biggest asset managers
• Exit opportunities

Source: Financial Edge Training

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Fundamental Analysis

Learn how to evaluate a business like a pro

• Introduction to Financial Analysis
• Financial Statements
• Financial Ratios
• Ratio Analysis
• Forecasting
• Budgeting

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Source: EXAFIN•Finance&Business

Financial Modeling 101

What's a financial model?

A financial model is like a big calculator that helps businesses and individuals plan and make decisions about money. It's a tool that uses numbers to show how things might turn out in the future.

Here's what you'll learn:

• Basic Guidelines for Financial Models
• Revenue and Customer Acquisition Models
• Cost of Goods Sold (COGS)
• Personnel Costs (SG&A Expenses Part 1)
• Other Overhead Expenses (SG&A Expenses Part 2)
• Nonoperating Expenses
• Common Financial Modeling Mistakes
• Balance Sheet
• Brief Digression on Cash Flow
• Cash Flow Statement
• Advanced Modeling Techniques
• Expense Checklist

Source: Dave Lishego

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Quantitative Methods

Everything you need to know about Finance

Here's what you will learn:
- Time value of money
- Statistical concepts and market returns
- Probability concepts
- Common probability distributions
- Sampling and estimation
- Hypothesis testing

Source: 365

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Aswath Damadoran is the Dean of Valuation.

He has taught millions of people how to value a company.

Today I am sharing his valuation class (worth thousands of $) for free

5 Rules on which Aswath Damodaran has built his success:

1️⃣ Principle of Intrinsic Valuation

Damodaran emphasizes the importance of intrinsic valuation, which involves estimating the fundamental value of an asset based on its expected future cash flows.

He often advocates for using discounted cash flow (DCF) analysis to determine the present value of future cash flows.

2️⃣ Risk and Discount Rates

Damodaran stresses the significance of understanding and incorporating risk into the valuation process.

He suggests using appropriate discount rates that reflect the risk associated with an investment. This may involve considering factors such as the company's beta, cost of equity, and risk-free rate.

3️⃣ Narrative and Numbers

Damodaran emphasizes the need to combine both qualitative and quantitative analysis.

While financial numbers are crucial, understanding the narrative or story behind those numbers is equally important.

Investors should consider both aspects to make informed investment decisions.

4️⃣ Market Efficiency and Behavioral Finance

Damodaran recognizes the efficiency of markets but also acknowledges that markets can be irrational in the short term.

He incorporates insights from behavioral finance into his analysis, recognizing that investor behavior may deviate from rational expectations.

5️⃣ Margin of Safety

While this principle is not unique to Damodaran, he does emphasize the importance of incorporating a margin of safety in valuation.

Investors should build a margin of safety into their estimates to account for uncertainties and unexpected events.

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Profit and loss

Here's what you need to know:

• S.P. = Selling Price
• C.P. = Cost Price
• M.P. = Marked Price
• Profit = S.P. - C.P.
• Loss = C.P. - S.P.

Profit and loss basics
• Selling Price (S.P.): The price at which an item is sold
• Cost Price (C.P.): The price at which an item is bought
• Marked Price (M.P.): The initial listed price before any discount

Key formulas:
• Profit: Profit=S.P.−C.P
• Loss: Loss=C.P.−S.P
• Discount=M.P.−S.P.

Source: Behavioral Economics on Twitter
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How to find great stocks in 6 steps

1️⃣ Study the competitive advantage

🎯 Why?
You don't want to invest in The Next Big Thing.

You want to invest in companies that have already won

🔍 How?
• Gross Margin > 40%
• ROIC > 15%

2️⃣ Look for companies with skin in the game

🎯 Why?
Companies with skin in the game outperform the market

🔍 How?
• Insider ownership > 10%

3️⃣ Low capital intensity

🎯 Why?
Companies that require very little capital to operate are very attractive for investors

🔍 How?
• CAPEX/Sales < 5%

4️⃣ Great capital allocation

🎯 Why?
Capital allocation is the most important task of management.

🔍 How?
• ROIC > 15%
• ROCE > 20%

5️⃣ High profitability

🎯 Why?
You want to invest in companies that translate most revenue into earnings

🔍 How?
• Profit margin > 10%
• Free cash flow margin > 10%

6️⃣ Secular trend

🎯 Why?
In the long term, stock prices tend to follow earnings growth.

The longer you hold a stock, the more earnings growth matters and the less valuation matters.

🔍 How?
• Revenue growth > 5%
• Earnings growth > 7%

💡 What's your favorite investment rule? Join the discussion in the comments!
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Mergers & Acquisitions

A crash course with everything you need to know

- Module 1: Introduction
- Module 2: Strategic Focus
- Module 3: Why mergers fail
- Module 4: Valuation
- Module 5: Bid tactics
- Module 6: Due diligence
- Module 7: The Concept of Implementation
- Module 8: Project management
- Module 9: Developing the Implementation Plan
- Module 10: Executing the Implementation Plan

Credits for Professor Alexander Roberts, Dr William Wallace & Dr Peter Moles

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