2nd progres test: topics and skills Report writing (findings based on a graph) Insurance Exchange rates + Tobin tax Derivatives Corporate finance1 (Bonds) Corporate finance 2 (Stocks) Mergers and acquisitions Accounting and financial statementsInsurance Exchange ratesTobin tax Derivatives Corporate finance1 (Bonds) Corporate finance 2 (Stocks) Accounting and financial statements

2nd progress test Tue, 2 June, regular hours

Accounting, cont. Review HW: RB, p

RB, p 74: THE PROFIT AND LOSS ACCOUNT What is sales revenue? Where do you see that profitable bond issuers have tax advantages? Can you spot a mistake in the table? What is gross profit?

RB, p 74: THE PROFIT AND LOSS ACCOUNT It shows i_______ and e_________. It gives figures for total sales turnover in a year or r________. It shows C_____ and _________ Part of the profit goes to the government in ta________, part to the sh_________ as d_________and part is retained by the c____________. COGS = SG&A = ncomexpenditure OGSSG&A xationareholders ividend ompany evenue Cost of goods sold Selling, general and administrative expenses

Cash flow statement Two directions of cash flow: Three types of company activities: o_______, f_______ & i________ activities Explain: operating, financing & investment perating inancingnvestment Cash inflow or sources of fundsCash outflow or applications of f.

Accounting cont. TALK ABOUT: Financial reporting and the annual report Use note-form summary (RB, p 70)

Accounting and Financial Statements operating, financing and investment activities flow of cash in and out of the business sources of funds: applications of funds: a)trading profitsb) purchase of assets c)sales of assetsd) borrowing e)issuing of sharesf) payment of dividends g)trading lossesh) depreciation provisions i) repayment of loans

Accounting and Financial Statements CASH FLOW STATEMENT operating, financing and investment activities flow of cash in and out of the business source of funds (in): a, c, d, e, h application of funds (out): b, f, g, i a)trading profitsb) purchase of assets c)sales of assetsd) borrowing e)issuing of sharesf) payment of dividends g)trading lossesh) depreciation provisions i) repayment of loans

profit: - tax – dividends – retained / net profit EBITDA COGS Sales revenue List them in the usual order:

PROFIT AND LOSS ACCOUNT profit: - tax – dividends – retained / net profit EBITDA SG&A COGS Sales revenue List them in the usual order: Sales revenue, COGS, SG&A, EBITDA... profit

the last day of the financial year company’s assets liabilities stockholders’ funds Classify as assets or liabilities: debtorscreditorsgoodwillpatents accounts receivableloans and bonds trade marksaccrued expensestaxes interestaccounts payablestock mortgagebuildingsvehicles overdraft

BALANCE SHEET the last day of the financial year company’s assets liabilities stockholders’ funds Classify as assets or liabilities: debtorscreditorsgoodwillpatents accounts receivableloans and bonds trade marksaccrued expensestaxes interestaccounts payable stock mortgagebuildingsvehicles overdraft

COMPLETE Tangible a….. have a phy….. existence, you can tou.. them. Over a period of time they lose their value or dep…..te. Intangible assets include br… names, pat…., and tra.. mar…. Am……tion refers to spreading an intangible asset's cost over that asset's useful life.

COMPLETE Tangible assets have a physical existence, you can touch them. Over a period of time they lose their value or depreciate. Intangible assets include brand names, patents, and trade marks. Amortization refers to spreading an intangible asset's cost over that asset's useful life.

Balance sheet, cont. 1. Complete the basic accounting equation: A______ = L________ + S________________ or _______ - ________ = ___________________ ssets iabilitieshareholders’ equity Assetsliabilities shareholders’ equity

REVIEW: Provide opposites: Short-term liabilities Fixed assets Debtors Tangible Assets Current cost acc. Payables Own Income Net Long-term liabilities Current assets Creditors Intangible Liabilities Historical cost acc. Receivables Owe Expenditure Gross → RB, p 76

Report writing + graph description Your company is considering taking over Sunset PLC. On 20 May your Managing Director asked you to analyse the revenue and costs of Sunset PLC for the period between 2009 and 2015 and give your recommendation. Write a report and submit it by 26 May. You have obtained the financial information from Sunset’s annual reports. Invent any necessary details. of Sunset Ltd