格拉斯哥大學(xué)運(yùn)營(yíng)管理教材

1、FINANCIAL INFORMATION MANAGEMENTSession 2012-13Lecture 1Admin information Christopher Coles Christopher.ColesGlasgow.ac.uk Room 469, Accounting and Finance Textbook Lectures Tutorials ExamHow this course proceeds Its fast paced and very intensive. It requires a lot of hard work. You need to do a lot

2、 of reading. Three aspects of accounting and finance; financial accounting, management accounting, financial management. Reading for today; pages 20-22, 32-47, 57-71, 85, and 90-96. Financial accounting This is where information on an entitys performance is given in the form of a Statement of Financ

3、ial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the accounts. Its very much post hocFinancial accounting You should all be aware of the principal user groups of accounting information. You should also, by now, have realised that accounti

4、ng information is not numbers it is about people, and is for people. So the ASSUMPTIONS which undergird accounting, together with the PRINCIPLES and ENHANCING CHARACTERISTICS are fundamental topics for our studies. Financial Accounting These ASSUMPTIONS comprise GOING CONCERN and ACCRUALS. Whats so

5、special about these? And what does “accruals” mean? Accounting information must have RELEVANCE and must be a FAITHFUL REPRESENTATION (previously, this was termed “Reliability”).Financial Accounting So what do these characteristics encompass? PREDICTIVE QUALITY TIMELINESS MATERIALITY CONSERVATISMFina

6、ncial Accounting Understandability Objectivity Verifiability Comparability Consistency Completeness Substance over form But not ACCURACY!Financial Accounting What is the main statement? Its the STATEMENT OF FINANCIAL POSITION (see pp35-45). You dont need to be able to draw up an SFP (traditionally k

7、nown as a BALANCE SHEET) for FIM PGT, but you DO NEED to know the principal components of an SFP and you MUST know the ACCOUNTING EQUATION. The SFP is a “snapshot” at a point in time.Financial Accounting The ACCOUNTING EQUATION is identified on Page 36. Its Assets = Capital + Liabilities. For limite

8、d companies, the word “Equity” is often used instead if “Capital”. Corollaries of this equation exist theyre on page 37. Well stick to A = C( or E) + L.Components NON CURRENT (FIXED) ASSETS. Tangibles and Intangibles Tangibles include Plant and Machinery Vehicles Land and buildings Fixtures and fitt

9、ings One of the above examples doesnt normally depreciate. Which one is it?Intangibles Investments Licences Leases Goodwill Brands These can depreciate (amortise) but as an alternative, they can be subject to IMPAIRMENT REVIEW. Valuation Generally, original purchase price less accumulated depreciati

10、on less any impairment. But what about certain assets dont they increase in value? Facility exists (not in some nations, eg USA) to REVALUE certain NCAs upwards. Corresponding account; REVALUATION RESERVE. A CEO once said “Our best asset is our staff”. Why dont they appear on the SFP, then? How abou

11、t football clubs? (See Gowthorpe, page 112). Depreciation Two main methods; STRAIGHT LINE (which is very easy) and REDUCING BALANCE (which tends to reflect reality for many items). Other methods exist. Depreciation is no more than a forecast. It will never be accurate. What happens where NCAs are so

12、ld for more, or less, than their book value? Depreciation Depreciation is a forecast of the wearing out of an asset over time, or of its obsolescence. If we didnt have it, our accounts wouldnt be fair. IT IS NOT a source of funds for replacement of NCAs. Some commentators think depreciation is a ver

13、y good thing, as it discourages ambitious managers from making rash expenditures. It therefore helps to solve the AGENCY PROBLEM. Depreciation A business buys a lorry for 50,000. It intends to keep the lorry for four years, after which it expects the lorrys residual value to be 10,000. How much depr

14、eciation should be provided for each year?Depreciation A business buys a new computer system for 12,000, and intends to write it off at 25% reducing balance. How much depreciation should be provided in Year 4? Current assets Items which are generally but not always smaller. They are almost always sh

15、own according to their liquidity, ie how easy are they to turn into cash? The first one is Inventory. Yet few business people in the UK refer to it as that!Inventory Includes raw materials, finished goods, and work in progress. What might be a NCA to one business might be inventory to another. Valua

16、tion is a manifestation of PRUDENCE. We value at the lower of original purchase price OR net realisable value.Inventory Its easy to value some goods, as they are readily identifiable and visible. However, other goods are FUNGIBLE; this would apply to most manufacturing raw materials, metals, oil and

17、 other fuels, and current asset investments. Where we have fungible goods, a decision must be taken (and maintained) on how to value. Inventory A company trades in a raw material, which originates in a politically volatile nation. The material is subject to quite wild price fluctuations. The next sl

18、ide gives a list of price fluctuations. Inventory 1 September; bought 5kg for 2.20/kg 4 September; bought 2kg for 2.40/kg 7 September; bought 3kg for 2/60/kg 10 September; sold 4 kg for 20. What is the value of remaining inventory on 10 September, using i) FIFO, ii) LIFO, iii) WA? Inventory LIFO (5

19、x 2.20) + (1 x 2.40) = 13.40. FIFO (3 x 2.60) + (2 x 2.40) + (1 x 2.20) = 14.20. WA (23.60/10) = 2.36. 6 x 2.36 = 14.16. Which one is the most accurate? Which one gives the most up to date price? Which one is illegal in the UK, and many other nations, but not in USA or Germany?Commentary By now, you

20、 should have realised that accounting is NOT an exact science, and that different treatments are appropriate to different business transactions. So, business accounts are a best fit; theres no appetite from users or preparers to radically change this. Current assets Other current assets include RECE

21、IVABLES and PREPAYMENTS, and CASH (in the bank, or in the firm itself). The total of assets will always equal the total of CAPITAL and LIABILITIES.Capital Limited companies have SHARES. Mostly, ordinary shares nominal values are declared on the SFP. A SHARE PREMIUM ACCOUNT is composed of the differe

22、nce between initial share sale price, and nominal share price. Some businesses have PREFERENCE SHARES these dont give any voting rights but they do pay out a fixed amount in preference to ordinary shares. Capital The RETAINED EARNINGS consists of NET accumulated distributable profits from current an

23、d earlier years. This money is prima facie available to pay out to shareholders. Companies differ in their dividend policies; some are more generous than others with their dividends.Capital Share capital, SPA, and Revaluation Reserve are generally unavailable for distribution to shareholders. What b

24、enefit would there be to shareholders in holding shares in a company which doesnt pay out much, if anything, in dividends? NB for much of its first 15 (highly profitable!) years, Microsoft didnt pay a dividend! Liabilities As with assets, we split these between NON CURRENT and CURRENT. The biggest c

25、ategory of non-current asset is DEBENTURES (bonds) long term loans which pay bondholders a fixed percentage. Companies gain tax relief on interest payments but interest has to be paid however profitable or unprofitable a company might be. So a big amount of debenture financing can lead to FINANCIAL

26、DISTRESS. Current Liabilities PAYABLES are usually the biggest category here, but we might also see INTEREST, TAX, and ACCRUALS. A company might be experiencing a temporary cash shortage at SFP date so a BANK OVERDRAFT might be shown in such circumstances. A non-corporate business The overwhelming m

27、ajority of businesses are small. Many big businesses started out small. Non-corporates (sole traders and partnerships) dont have shares. Instead, the owners capital invested replaces shares. The owner withdraws cash (“drawings”) on account of his/her profits. Statement of Comprehensive Income Permissible to use term “income statement”, especially for small businesses. This statement tells a story over a period of time; usually 12 months. Choice of accounts period (AP). Always start off with Revenue (aka Sales, or Turnover). Cost of sales Take opening inventory. Add purc