Accounting

As a legal requirement all companies must produce a set of accounts each year.

Limited Company

Annual Accounts

Accountants - audit the accounts of companies
Actuaries - advide on pension funding, valuing life assurance assets and liabilities, accessing mortality risks

Public Limited Company

Quarter Accounts (only in the US)
Half Year Accounts (also known as Interims)
Prelims
Annual Accounts

December and March year ends are common but a company can actually have any date as its year end.
There are three main items in the accounts:

• Profit and Loss

• Cash Flow

• Balance Sheet

Investment Ratios

There are basically two categories of investment ratios

• Company Ratios - Tell us about the health and outlook of a particular company

• Performance Ratios - Relate to the companies performance to the share price

Unsettled Cash

This is the amount allocated towards trades before they have been settled
This can be credit or debit.

On day 1 you have £20m in cash
On the same same you buy £10m worth of bonds

On day 2 you still have £20m in cash and £10m in bonds
You need to minus the £10m and this becomes Unsettled Cash

Most funds are calculated on a weighted average cost basis
Buy 2m
Buy 1m - your holding is now 3m
Sell 1m - price is the weighted average cost across all trades.

Some funds are calculated on a FIFO cost basis
Buy 2m
Buy 1m - your holding is now 3m
Sell 1m - this is taken from the original 2m position.

Auditing