FINANCE AND ACCOUNTING NON-FINANCIAL PROFESSIONALS FOR NON-FINANCIAL PROFESSIONALS TRAINING COURSE Business Research and Service Institute Pennsylvania, USA brasi.org

AGENDA 1. Introduction to Business and Finance 2. Analyzing Information in Financial Statements 3. Time Value of Money 4. Capital and Returns 5. Valuations and Terminology

Session 1 INTRODUCTION To BUSINESS & FINANCE CISCOM Session 1 INTRODUCTION To BUSINESS & FINANCE Business Research and Service Institute www.brasi.org

Manufacturing Business Types of Businesses Manufacturing Business Product Toyota Cars, trucks, vans Intel Computer chips Boeing Jet aircraft Nike Athletic shoes and apparel Coca-Cola Beverages Sony Stereos and television

Merchandising Business Types of Businesses Merchandising Business Product Wal-Mart General merchandise Toys “R” Us Toys Mustafa Consumer electronics Seven-Eleven Grocery Item LibertyBooks.com Book

Types of Businesses Service Business Disney Entertainment Product Disney Entertainment British Airways Transportation Marriott Hotels Hospitality and lodging Merrill Lynch Financial advice T-Mobile Telecommunication

Alternative Forms of Business Organization Types of Business Organizations A business takes one of three forms of organization. In some cases, accounting procedures depend on which form the organization takes.

There are three types of business organizations Proprietorship Partnership Corporation

A proprietorship is owned by one individual. Jack’s

10

A partnership is owned by two or more individuals. Jack and Alvin’s

13

A corporation is organized under state or federal statutes as a separate legal entity. J & A, Inc.

15

Business Strategies A business strategy is an integrated set of plans and actions designed to enable the business to gain an advantage over its competitors, and in doing so, to maximize its profits.

Business Strategies Under a low-cost strategy, a business designs and produces products or services of acceptable quality at a cost lower than that of its competitors. Wal-Mart Suzuki Cars

Business Strategies Under a differential strategy, a business designs and produces products or services that possess unique attributes or characteristics which customers are willing to pay a premium price. Giorgio-Armani BMW

Business Stakeholders A business stakeholder is a person or entity having an interest in the economic performance of the business.

Business Ethics

Sound Principles that form the foundation for ethical behavior Business Ethics 1. Avoid small ethical lapses. 2. Focus on your long-term reputation. 3. You may expect to suffer adverse personal consequences for holding to an ethical position. Sound Principles that form the foundation for ethical behavior

The Financial Statements

Financial Statements: THE FLOW OF INFORMATION 1. People make decisions 2. Business transactions occur 3. Businesses prepare reports to show the results of their operations

Financial Statements: Preparation

DECISION MAKERS WHO USE FINANCIAL STATMENTS Individuals Businesses Investors and Creditors Government Regulatory Agencies Taxing Authorities Nonprofit Organizations

Financial and Management Accounting External Users (Financial Accounting) Internal Users (Management Accounting)

Questions Asked by Internal Users

Questions Asked by External Users

The Balance Sheet What are the different sections of the Balance Sheet?

BALANCE SHEET The balance sheet (statement of financial position) reports the company’s assets, liabilities, and owners’ equity

BALANCE SHEET

Balance Sheet Problems NUTRINA PRODUCTS INC.

Case Study Pioneer Pharmacy Balance Sheet

INCOME STATEMENT The income statement (statement of earnings) reports the company’s revenues, expenses, and net income or net loss for the period

INCOME STATEMENT

INCOME STATEMENT YANON SOUND & VIDEO, INC.

BALANCE SHEET (COMPLEX ) DREAM REALTORS

STATEMENT OF CASH FLOWS The statement of cash flows reports the company’s cash inflows and outflows from operating, investing, and financing activities

STATEMENT OF CASH FLOWS Operating activities Companies operate by buying goods and services, which are sold to customers Investing Activities Companies invest in long-term assets that are used to run the business Financing Activities Companies finance themselves by issuing stock and borrowing money

RELATIONSHIPS AMONG THE FINANCIAL STATEMENTS

INFORMATION REPORTED ON THE FINANCIAL STATEMENTS

Question Answer Financial Statement 1. 2. 3. 4.

Summary of Types Learning Objectives 1. 2. 3.