Finance Fundamentals

 


   Thanks for the Acc 505 course which prepared me in accounting and finance. So this was an important revisit of the accounting and finance basic concepts. This week I learned how to calculate and create an Excel spreadsheet of basic finance calculations such as the time value of money, annuity, and perpetuity. It was a challenging exercise to practice equations and some math.   

In addition, I learned about financial statements and financial ratios. The information from these statements and ratios is very useful for corporate and investor decisions. I read the Corporate Finance Institute's article "Financial Statements Examples, Amazon Case Study" which provides an in-depth analysis of Amazon.com's financial statements to illustrate key components and line items. The article emphasizes the importance of understanding financial statements for assessing a company's profitability and liquidity.

The assignment was a good exercise for some math and understanding the analysis of the balance sheet. However, I needed more reading to understand External Fund Needs (EFN). Concluded that EFN is the amount of external financing a company requires to support its projected growth. It accounts for the shortfall between the company's internal funding (retained earnings) and the total funds needed to finance new assets. It can be calculated as EFN= increase in assets- increase in liabilities- change in retained earnings based on the expected growth of assets and liabilities. 


References:

 University of Illinois, Springfield, Module 5: Lecture Materials. McGraw-Hill/Irwin.

CFI Team. (n.d.). Financial statements examples – Amazon case study: An in-depth look at Amazon's financial statements. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/accounting/financial-statements-example-amazon-case-study/

Comments

Post a Comment

Popular posts from this blog

Business ethics and leadership

  As medical practitioner, ethics are essential in our career. For years, I have learned a lot about ethics. However, this is the first time my attention has been paid to business ethics. During the first week of the Business 501 course, I learned about the importance of ethics in business and realized that business can not exist without ethics. Discussions and engaging with colleagues during the first module exposed me to various ethical stories in business.  I have read an article entitled " The Rise of Ethical Leadership In Modern Business Enterprise"  published in Forbes (Terzievia, 2023). The article focuses on the importance of ethical leaders in today's business. The article explains how ethical leaders positively impact their companies and societies. It describes that ethical leaders act with integrity, lead with humanity, and value respect, fairness, and trust.  Ethical leadership is not just a moral obligation but a strategic advantage. By implementing ethi...
Read more

Porter's Five Forces Model

    During the second week of the course, I learned about Porter's five forces model. It is amazing! After reading different articles (Karri, 2021 & Martin, 2023), trying to answer the prompts questions in the lecture, and discussing real business case scenarios, I realized the importance of this model in business analysis, strategic planning, decision making, and profitability. Applying this model to real business scenarios, enabled me to think critically about market dynamics.  In addition to cases and examples provided in the reading and lecture material, I have read an article (Chand, 2023) on RB Patel in Fiji as a case study of Porter's Five Forces Model. The case study analyzed the company's challenging situation and provided various strategies that might overcome these challenges. This case is a real-world example of how this model can guide the strategy.  Now I feel more eager to learn more about businesses and enjoying the rest of the course.  ...
Read more

Marketing concepts and Group assignment

     This week, I tried to link what I have learned in the last 2 weeks on marketing together. However, the challenge was that the work should be done with a group that we never met and remotely! This week, I learned about value, pricing, and product positioning.  The pricing strategy of the 5 Cs linked many concepts that I learned earlier and economic concepts such as supply and demand, elasticity, competition, cost and others. Price is main factor for any product and it is connected to many factors. I learned about product positioning which was new for me. Now, it is clear to me. I have read and discovered many product statements of different companies.   A positioning statement succinctly describes a product and its target audience, explaining how it meets a market need uniquely. This tool ensures consistent messaging across marketing and sales teams. I found an interesting article (Murphy, 2023)  that offers practical tips for writing a positioning...
Read more