During the development of a project aimed at creating portfolio management tools based on econometric and machine learning models, which utilize financial statement data among other sources, it was imperative for me to immerse myself in the study of financial accounting from an analyst's perspective. As I transitioned into the role of a quantitative analyst, it became apparent that a robust understanding of these concepts is indispensable for extracting the full potential of financial statements in quantitative models. Wanting to retain this knowledge and share it with fellow enthusiasts, I reviewed my notes and set out to craft a series of blog posts covering the areas I found most pertinent and insightful.
These posts will likely evolve over time as I add to and edit them, mirroring my continuous exploration of data science projects grounded in these crucial financial accounting principles.
Although I strive for the utmost precision, I cannot vouch for the absolute accuracy of the information shared here. However, I firmly believe in its value as a tool that I, and hopefully others, can use to navigate the landscape of financial accounting. I warmly invite any feedback or suggestions - feel free to reach out at [email protected].
The below cards link to the blog posts I created that review financial accounting topics that bear significance to portfolio management:
An overview of what financial accounting is, what financial statements are and why they are useful in portfolio management.
Discusses accrual accounting and why this is an important staring point for understanding financial statements.
Introduces allowance accounting and it's impact on financial statements.
Reviews concepts of inventory accounting including FIFO, LIFO, touches on IFRS and GAAP requirements and explores adjusting LIFO to FIFO when comparing or valuing companies.
Explores how plant, property & equipment are accounted for and the implications this has on understanding financial statements.
Discusses intangible assets and how they are accounted for.
Introduces the statement of cash flows and why it is important to understand a companies cash flows.
Introduces how acquisitions and financial investments are accounted for on financial statements.
Provides a basic introduction to what financial statement analysis is and why it is useful in portfolio management.
Explores the basic concepts around corporate income tax, how it impacts accounting and financial statements, and its impact on portfolio management.
Discusses how long-term debt is accounted for.
Provides an overview of how simple operating and finance leases are accounted for from a lessee perspective.
Explores shareholders' equity, how it is accounted for in financial statements, and other considerations investors should be aware of.