Financial and Business Management
BEC 52306
Period 1 2021
Wageningen University
Summary
Based on the book Accounting and Finance for Non-Specialists by Peter Atrill and Eddie McLaney, 11th edition
Anneli Janzer
,Contents
Part 1: Financial Accounting ....................................................................................................................... 1
Chapter 1: Introduction to accounting and finance ................................................................................ 1
Accounting as a service ...................................................................................................................................................1
Accounting as an information system...........................................................................................................................1
Management accounting and financial accounting .....................................................................................................1
Risk .....................................................................................................................................................................................2
Chapter 2: Measuring and reporting financial position ..........................................................................2
Layout statements ............................................................................................................................................................2
The statement of financial position (balance sheet) ...................................................................................................2
Accounting conventions (rules) .....................................................................................................................................3
Part 2: Performance .....................................................................................................................................4
Chapter 3: Measuring and reporting financial performance ...................................................................4
The income statement .....................................................................................................................................................4
Some more Convention Rules .......................................................................................................................................4
Calculating Depreciation Expense ................................................................................................................................5
Costing inventories ..........................................................................................................................................................5
Chapter 4: Accounting for limited companies ........................................................................................6
Managing a company .......................................................................................................................................................6
Financing limited companies ..........................................................................................................................................6
Income statement of ltd company.................................................................................................................................6
Accounting rules...............................................................................................................................................................7
Chapter 5: Measuring and reporting cash flows .....................................................................................7
The statement of cash flows ...........................................................................................................................................7
The layout of the statement of cash flows (cash flow activities) and the deduction of net cash flows from
the 3 major cash flow activities ......................................................................................................................................7
Relationship between main financial statements.........................................................................................................8
Net cash flows from operating activities ......................................................................................................................8
Chapter 6: Analyzing and interpreting financial statements...................................................................8
Need for comparison.......................................................................................................................................................8
Financial ratio classifications (5) ....................................................................................................................................8
Calculating the ratios .......................................................................................................................................................8
Profitability ........................................................................................................................................................................8
Efficiency ...........................................................................................................................................................................9
Liquidity .............................................................................................................................................................................9
Financial gearing ...............................................................................................................................................................9
Investment ratios........................................................................................................................................................... 10
Limitations of ratio analysis ......................................................................................................................................... 11
Part 3: Management Accounting .............................................................................................................. 12
, Chapter 7: The Relevance and Behaviour of Costs ............................................................................... 12
Opportunity and outlay costs ...................................................................................................................................... 12
Break Even Point (BEP) .............................................................................................................................................. 12
Operating gearing .......................................................................................................................................................... 12
Weaknesses of break even analysis ............................................................................................................................. 12
Marginal Analysis .......................................................................................................................................................... 13
Chapter 8: Full costing .......................................................................................................................... 13
Job costing (service) ...................................................................................................................................................... 14
Activity-based costing (ABC) ...................................................................................................................................... 15
Part 4 Finance ........................................................................................................................................... 16
Chapter 10: Making Capital Investment decisions ............................................................................... 16
Accounting Rate of Return (ARR) ............................................................................................................................. 16
Payback Period (PP) ..................................................................................................................................................... 16
Net Present Value (NPV) ............................................................................................................................................ 17
Internal Rate of Return ................................................................................................................................................ 17
Chapter 11: Financing a business .......................................................................................................... 19
Sources of finance ......................................................................................................................................................... 19
Raising long term finance via share issues ................................................................................................................ 22
Chapter 12: Managing Working Capital ................................................................................................ 24
Managing inventories.................................................................................................................................................... 24
Levels of control............................................................................................................................................................ 24
Inventories management models ................................................................................................................................ 24
Managing trade receivables .......................................................................................................................................... 25
Managing cash ............................................................................................................................................................... 26
Managing trade payables .............................................................................................................................................. 26
Guest Lecture 1: "Closing productivity gaps among Dutch dairy farms can boost profit and reduce
nitrogen pollution".................................................................................................................................... 27
BEC 52306
Period 1 2021
Wageningen University
Summary
Based on the book Accounting and Finance for Non-Specialists by Peter Atrill and Eddie McLaney, 11th edition
Anneli Janzer
,Contents
Part 1: Financial Accounting ....................................................................................................................... 1
Chapter 1: Introduction to accounting and finance ................................................................................ 1
Accounting as a service ...................................................................................................................................................1
Accounting as an information system...........................................................................................................................1
Management accounting and financial accounting .....................................................................................................1
Risk .....................................................................................................................................................................................2
Chapter 2: Measuring and reporting financial position ..........................................................................2
Layout statements ............................................................................................................................................................2
The statement of financial position (balance sheet) ...................................................................................................2
Accounting conventions (rules) .....................................................................................................................................3
Part 2: Performance .....................................................................................................................................4
Chapter 3: Measuring and reporting financial performance ...................................................................4
The income statement .....................................................................................................................................................4
Some more Convention Rules .......................................................................................................................................4
Calculating Depreciation Expense ................................................................................................................................5
Costing inventories ..........................................................................................................................................................5
Chapter 4: Accounting for limited companies ........................................................................................6
Managing a company .......................................................................................................................................................6
Financing limited companies ..........................................................................................................................................6
Income statement of ltd company.................................................................................................................................6
Accounting rules...............................................................................................................................................................7
Chapter 5: Measuring and reporting cash flows .....................................................................................7
The statement of cash flows ...........................................................................................................................................7
The layout of the statement of cash flows (cash flow activities) and the deduction of net cash flows from
the 3 major cash flow activities ......................................................................................................................................7
Relationship between main financial statements.........................................................................................................8
Net cash flows from operating activities ......................................................................................................................8
Chapter 6: Analyzing and interpreting financial statements...................................................................8
Need for comparison.......................................................................................................................................................8
Financial ratio classifications (5) ....................................................................................................................................8
Calculating the ratios .......................................................................................................................................................8
Profitability ........................................................................................................................................................................8
Efficiency ...........................................................................................................................................................................9
Liquidity .............................................................................................................................................................................9
Financial gearing ...............................................................................................................................................................9
Investment ratios........................................................................................................................................................... 10
Limitations of ratio analysis ......................................................................................................................................... 11
Part 3: Management Accounting .............................................................................................................. 12
, Chapter 7: The Relevance and Behaviour of Costs ............................................................................... 12
Opportunity and outlay costs ...................................................................................................................................... 12
Break Even Point (BEP) .............................................................................................................................................. 12
Operating gearing .......................................................................................................................................................... 12
Weaknesses of break even analysis ............................................................................................................................. 12
Marginal Analysis .......................................................................................................................................................... 13
Chapter 8: Full costing .......................................................................................................................... 13
Job costing (service) ...................................................................................................................................................... 14
Activity-based costing (ABC) ...................................................................................................................................... 15
Part 4 Finance ........................................................................................................................................... 16
Chapter 10: Making Capital Investment decisions ............................................................................... 16
Accounting Rate of Return (ARR) ............................................................................................................................. 16
Payback Period (PP) ..................................................................................................................................................... 16
Net Present Value (NPV) ............................................................................................................................................ 17
Internal Rate of Return ................................................................................................................................................ 17
Chapter 11: Financing a business .......................................................................................................... 19
Sources of finance ......................................................................................................................................................... 19
Raising long term finance via share issues ................................................................................................................ 22
Chapter 12: Managing Working Capital ................................................................................................ 24
Managing inventories.................................................................................................................................................... 24
Levels of control............................................................................................................................................................ 24
Inventories management models ................................................................................................................................ 24
Managing trade receivables .......................................................................................................................................... 25
Managing cash ............................................................................................................................................................... 26
Managing trade payables .............................................................................................................................................. 26
Guest Lecture 1: "Closing productivity gaps among Dutch dairy farms can boost profit and reduce
nitrogen pollution".................................................................................................................................... 27
