Finance Summary
Finance lecture chapter 2
Finance lecture 3
Finance lecture 3
Finance lecture 3
Finance lecture 4
Finance lecture 6/ 4
Finance lecture 4
2 7
3
4
5
8 1
, Finance lecture chapter 1
Financial accounting:
• Annual report: a comprehensive report on a company’s activities throughout the preceding
year. Annual reports are intended to give shareholders and other interested people information
about company’s activities and nancial performance.
Financial accounting is based upon three pillars:
• The balance sheet: A snapshot of all the assets of the company on the left (asset) side and on
the right (equity and liability) side the ownership distribution. -> left side is what the company
owns and the right side is how it is nanced. The balance sheet is always equal.
• The pro t and loss statement: Shows the value of the activity performed (turnover) in relation
to the used resources (costs) in a period. -> how much money is earned and how much has it
cost to make these earnings.
• The cash ow statement: A periodical overview of all cash ows in and out the company.
DBE due diligence project notes:
• Due diligence: an investigation or audit of a potential investment or product to con rm all facts,
that might include the review of nancial records. -> due diligence refers to the research done
before entering into an agreement or a nancial transaction with another party.
Multiple aspects of due diligences:
• Financial Due Diligence (DBE): involves an investigative analysis of a business, assessing the
key issues facing the business and the drivers behind maintainable pro ts and cash ows,
identifying the key nancial risks and potential deal breakers of the transaction.
• Operational Due Diligence: the process by which a potential purchaser reviews the operational
aspects of a target company. -> bol.com want to take over coolblue, you could look at delivery
process, customer services.
• Legal Due Diligence: the process of collecting, understanding and assessing all the legal risks
associated with a target company. -> the legal risk you become responsible for when you take
over the company.
• Compliance Due Diligence: bribery, international data protection regulations, procurement law
and anticorruption regulations and integrity risk. -> if you want to take-over a company you
check how their reputation is. Your reputation should not be negative a ected by this. If you
want to take over a company and you nd some bad news about them: front page check. How
would it a ect our business and would other businesses still want to work with us.
• Environmental and social due diligence: If you want to take over a company that is working in
the oil industry, which caused environmental damage, this can have a nancial a ect.
- How are our DBE chosen company’s scoring at environmental and social due diligence wise?
Non- nancial risks
• Non- nancial risks can materialise into a nancial risk.
• Think about bush res, Covid 19, environmental damage, lawsuits for violating agreements,
violation of human rights, work safety etc.
Financial ratios
• Solvability
• Credibility
• Quick ratio
• Acid ratio
• Current ratio
Non- nancial risks
When looking into companies you selected, think about their business / sector and non- nancial
risks that could materialise.
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, For project: search on reputation risk
Google company’s name + corruption
Company’s name + lawsuit
Company’s name + human rights
Excel tutorials
- 1
- 2
Finance lecture 2
DBE notes
Use Lexis Nexis, Google, newspaper archives (search terms: corruption, lawsuits, child labour,
human rights, safety etc).
• Look for risk management: this is very important to look into -> see example of H&M group.
Finance = decision making = ethical decision making.
• Muel Kapitein article about stakeholders vs shareholders.
Asset: If a company buys a factory but the transaction did not yet take place it is not seen as an
asset.
- understand how non- nancial risks can have an impact on the nancials of a company
- Know the di erence between management and nancial accounting.
Finance lecture 3
Need to know the di erence between three nancial statements:
• Balance sheet
• Pro t / loss statement: performance of company during the year
• Cash ow: where the money is coming out and coming in
-> how do these in uence each other?
A company can have a loss as long as it has enough reserves.
Understand legal form -> equity we talk about limited companies (bv)
-> eenmanszaak heeft geen equity: geen onderscheiding tussen persoon en bedrijf.
Pro t for period = operating pro t + non-operating income - interest payable
-> pro t for period will be added to equity in statement of nancial position
Know how to deal with bad debts
Finance lecture 4
Limited companies (BV) / sole proprietorship (eenmanszaak).
eenmanszaak: geen verschil tussen jouw persoonlijke zaken en de business zaken.
Limited company: only bounded to the capital it has provided.
Public company’s: stocks are available at the stock market.
Public company’s: stocks are not available at the stock market.
Who buys shares (who invest): private investors / angel investors / investment management
rms / venture capital rms / pension funds / companies.
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, Corporate governance code: to prevent company’s from con ict.
Preference shareholders go before ordinary shareholders.
They both have a vote on the share holdings meeting.
Dividends are paid when there is earned money (a proportion of the pro t).
Retained earnings
Think about the investor persona for DBE project
Finance lecture 5
Know the di erences between nancial accounting, management accounting and capital
investment decision making.
Solvency (niet in boek) = how heavy is the company loaded with debt? -> how leveraged is the
company?
A good solvency = little debt = low liabilities
A bad solvency = a lot of debt = high liabilities
Formala = (debt/equity) x100
If the acid-test ratio is much lower than the current ratio, it means that a company’s current assets
are highly dependent on inventory.
Voor individual assignment neem de self-assessment opdrachten in het boek door.
*de vraag in mijn accounting lab waar de antwoord mogelijkheden 8000 pro t, 8000 loss, 13000
pro t and 13000 loss is nog een keer doornemen.
Finance lecture 6/7
Ratios voor individual assignments!!!!
Cash ow statement = overview of cash own in and out of the company. Without a proper a
liquidity ratio a company can run out of business.
If you have enough cash at your bank account, more than current liabilities. This means you can
always pay the liabilities.
Depending on too much on inventories, is not considered as cash, rst need to sell it in order to
make it liquid.
Pro tability ratios = how much money does the company generate?
Finance lecture 8
Investment appraisal methods:
- Accounting rate of return (ARR)
- Payback period (PP)
- Net present value (NPV)
- Internal rate of return (IRR)
ARR: (average annual operating pro t / average investment to earn that pro t) x100
PP: time taken for initial investment to be repaid out of project net cash in ows
Bij NPV market research costs are not taken into account!!!!!!!
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Finance lecture chapter 2
Finance lecture 3
Finance lecture 3
Finance lecture 3
Finance lecture 4
Finance lecture 6/ 4
Finance lecture 4
2 7
3
4
5
8 1
, Finance lecture chapter 1
Financial accounting:
• Annual report: a comprehensive report on a company’s activities throughout the preceding
year. Annual reports are intended to give shareholders and other interested people information
about company’s activities and nancial performance.
Financial accounting is based upon three pillars:
• The balance sheet: A snapshot of all the assets of the company on the left (asset) side and on
the right (equity and liability) side the ownership distribution. -> left side is what the company
owns and the right side is how it is nanced. The balance sheet is always equal.
• The pro t and loss statement: Shows the value of the activity performed (turnover) in relation
to the used resources (costs) in a period. -> how much money is earned and how much has it
cost to make these earnings.
• The cash ow statement: A periodical overview of all cash ows in and out the company.
DBE due diligence project notes:
• Due diligence: an investigation or audit of a potential investment or product to con rm all facts,
that might include the review of nancial records. -> due diligence refers to the research done
before entering into an agreement or a nancial transaction with another party.
Multiple aspects of due diligences:
• Financial Due Diligence (DBE): involves an investigative analysis of a business, assessing the
key issues facing the business and the drivers behind maintainable pro ts and cash ows,
identifying the key nancial risks and potential deal breakers of the transaction.
• Operational Due Diligence: the process by which a potential purchaser reviews the operational
aspects of a target company. -> bol.com want to take over coolblue, you could look at delivery
process, customer services.
• Legal Due Diligence: the process of collecting, understanding and assessing all the legal risks
associated with a target company. -> the legal risk you become responsible for when you take
over the company.
• Compliance Due Diligence: bribery, international data protection regulations, procurement law
and anticorruption regulations and integrity risk. -> if you want to take-over a company you
check how their reputation is. Your reputation should not be negative a ected by this. If you
want to take over a company and you nd some bad news about them: front page check. How
would it a ect our business and would other businesses still want to work with us.
• Environmental and social due diligence: If you want to take over a company that is working in
the oil industry, which caused environmental damage, this can have a nancial a ect.
- How are our DBE chosen company’s scoring at environmental and social due diligence wise?
Non- nancial risks
• Non- nancial risks can materialise into a nancial risk.
• Think about bush res, Covid 19, environmental damage, lawsuits for violating agreements,
violation of human rights, work safety etc.
Financial ratios
• Solvability
• Credibility
• Quick ratio
• Acid ratio
• Current ratio
Non- nancial risks
When looking into companies you selected, think about their business / sector and non- nancial
risks that could materialise.
fifi fi fffl fi fi fifi fi fifi fi fl fifffi ff fifl fi
, For project: search on reputation risk
Google company’s name + corruption
Company’s name + lawsuit
Company’s name + human rights
Excel tutorials
- 1
- 2
Finance lecture 2
DBE notes
Use Lexis Nexis, Google, newspaper archives (search terms: corruption, lawsuits, child labour,
human rights, safety etc).
• Look for risk management: this is very important to look into -> see example of H&M group.
Finance = decision making = ethical decision making.
• Muel Kapitein article about stakeholders vs shareholders.
Asset: If a company buys a factory but the transaction did not yet take place it is not seen as an
asset.
- understand how non- nancial risks can have an impact on the nancials of a company
- Know the di erence between management and nancial accounting.
Finance lecture 3
Need to know the di erence between three nancial statements:
• Balance sheet
• Pro t / loss statement: performance of company during the year
• Cash ow: where the money is coming out and coming in
-> how do these in uence each other?
A company can have a loss as long as it has enough reserves.
Understand legal form -> equity we talk about limited companies (bv)
-> eenmanszaak heeft geen equity: geen onderscheiding tussen persoon en bedrijf.
Pro t for period = operating pro t + non-operating income - interest payable
-> pro t for period will be added to equity in statement of nancial position
Know how to deal with bad debts
Finance lecture 4
Limited companies (BV) / sole proprietorship (eenmanszaak).
eenmanszaak: geen verschil tussen jouw persoonlijke zaken en de business zaken.
Limited company: only bounded to the capital it has provided.
Public company’s: stocks are available at the stock market.
Public company’s: stocks are not available at the stock market.
Who buys shares (who invest): private investors / angel investors / investment management
rms / venture capital rms / pension funds / companies.
fi fi flfi ff fl fffifi fi fi fi fi fi
, Corporate governance code: to prevent company’s from con ict.
Preference shareholders go before ordinary shareholders.
They both have a vote on the share holdings meeting.
Dividends are paid when there is earned money (a proportion of the pro t).
Retained earnings
Think about the investor persona for DBE project
Finance lecture 5
Know the di erences between nancial accounting, management accounting and capital
investment decision making.
Solvency (niet in boek) = how heavy is the company loaded with debt? -> how leveraged is the
company?
A good solvency = little debt = low liabilities
A bad solvency = a lot of debt = high liabilities
Formala = (debt/equity) x100
If the acid-test ratio is much lower than the current ratio, it means that a company’s current assets
are highly dependent on inventory.
Voor individual assignment neem de self-assessment opdrachten in het boek door.
*de vraag in mijn accounting lab waar de antwoord mogelijkheden 8000 pro t, 8000 loss, 13000
pro t and 13000 loss is nog een keer doornemen.
Finance lecture 6/7
Ratios voor individual assignments!!!!
Cash ow statement = overview of cash own in and out of the company. Without a proper a
liquidity ratio a company can run out of business.
If you have enough cash at your bank account, more than current liabilities. This means you can
always pay the liabilities.
Depending on too much on inventories, is not considered as cash, rst need to sell it in order to
make it liquid.
Pro tability ratios = how much money does the company generate?
Finance lecture 8
Investment appraisal methods:
- Accounting rate of return (ARR)
- Payback period (PP)
- Net present value (NPV)
- Internal rate of return (IRR)
ARR: (average annual operating pro t / average investment to earn that pro t) x100
PP: time taken for initial investment to be repaid out of project net cash in ows
Bij NPV market research costs are not taken into account!!!!!!!
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ff fi fi fl fl fi fi fl fifi
