1. Basics of financial management
Week 1

2. Today Introduction Goals for today Some basics
Understanding the difference between finance, financial accounting and management accounting
Understanding the difference between balance sheet, income statement and cash flow statement
Exercises to prepare for next class

3. Introduction (1/2) Introduce yourself Examination
Combination of multiple choice / open style / true or false questions
No mandatory presence required, but experience tells me to follow classes especially for the exercises
6 classes in total
Check blackboard for presentations
Chapters
Additional slides
Answers to exercises

4. Introduction (2/2) Programme across the several weeks:
Class 1: ch1, 2, 3, 4
Class 2: ch5, 9, exercises class 1
Class 3: ch11, 12, 14, exercises class 2
Class 4: ch15, 16, 17, exercises class 3
Class 5: exercises class 4, Short recap
Class 6: mock examination
Examination

5. Business Production organization striving for profit
Transformation of production resources into end products
Collaboration of participants
Sales revenues
>
Costs of resources

6. Production process Production process Raw materials Fixed assets
Labour
End products
Procurement market
Sales market
Cash

7. Efficiency and effectiveness in the production process
Input
Trans-formation process
Output
realization of objectives
Efficiency
Cost per unit
Effectiveness
Sales

8. Aspects of the choice of a legal form
Management and ownership
Financing possibilities
Continuity
Liability
Tax consequences
Disclosure of financial information

9. Merger in the production chain: vertical integration

10. Merger in the production chain: horizontal integration

11. Merger in the production chain: conglomerate acquisition

12. Forms of association Merger/ takeover
Formerly independent companies are joint together
Legal
Franchising
Independent entrepreneurs affiliate with a chain in order to get access to certain facilities
Cartelization
Independent companies draw up agreements that are designed to restrict competition
Illegal

13. Financial Management disciplines
Corporate Finance
Management accounting
Financial accounting

14. Corporate Finance Investments --- Assessment criteria
Finance Choice of source of capital

15. (Financial) reporting
Management accounting
Internal
Future oriented
No regulations
No tendency to creative accounting
Financial accounting
External
Past oriented
Regulations
Tendency to creative accounting

16. The balance sheet Balance sheet
Serve the business for more than one year
Fixed assets
Equity
* Owners
* Unlimited period
* Reward depends on
profit
* Risk-bearing
Time between purchase and use is shorter than one year
Current assets
Liabilities
* Creditors
* Temporary
* Fixed reward
* Risk-avoiding

17. Profit determination Balance sheet at start of period
Increase of Equity = Profit
(Except for private contributions and private drawings)
Balance sheet at end of period
Profit and loss account specifies the composition of profit

18. Receipts/expenditure vs. Revenue/costs
Difference on balance sheet
Sales
Receipt
Payment by cystomer
Revenue
Activities for customer
Receivables
Fixed assets
Expenditure
Purchase
Depreciation
Book value
Loans/Credit
Amount
Repayment
Interest
Liabilities
---
Provisions
Increase provision

19. Depreciation

20. Direct changes in equity
Private contribution
Profit and loss account
No influence
Balance sheet
Equity increase
Private withdrawal
Equity decrease
Equity 31/12
Equity 1/1
Change in equity
Private contribution
Private withdrawal
Profit
Substract:
Add:

21. For next class
Exercises
E1.4
E3.4
Warm-up questions
2.2
3.4