an entity Measures business activity 10 WHO USES ACCOUNTING DATA? Internal users External users Managers who plan, Investors who make organise and run the decisions to buy, hold or business sell shares e.g., marketing Creditors who evaluate managers, production risks of giving credit and supervisors, chief lending money financial officers, other e.g., suppliers, bankers employees Government and regulatory bodies e.g., ATO, ASIC 11 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
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are based on cash flows, not accounting income (Incremental cash flows are to be considered, not sunk costs) 2) Cash flows are based on opportunity costs 3) The timing of cash flows is important 4) Cash flows are analyzed on an after-tax basis 5) Financing costs are reflected in the project’s required rate of return Net Present Value (NPV) The NPV is the sum of present values of all expected incremental cash flows if a project is undertaken. The discount rate used is the firm’s cost of capital
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There is also difficulty in raising large sums of money as you are a single person. Since the business profits are also the owner’s profits, there is no distinct line between personal income and business income. The business will only generally last as long as the owner is alive or wants to run it. Partnerships This is generally the same as a sole proprietorship except that there is more than one owner. It generally has the same advantages and disadvantages as a
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It also lists assets first, followed by liabilities and stockholders’ equity. The assets on a balance sheet are classified as either current or fixed assets. Current assets are the most liquid, meaning they easily convert to cash. Fixed assets are long-termed assets. Similar to assets, liabilities are also classified
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(519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2007, Richard Ivey School of Business Foundation Version: (A) 2010-06-18 OVERVIEW Barb Williams and Steven Lau, two managers from service firms, were attending a week-long executive education course at a well-known business school in February 2006. In preparation for the next day’s classroom session, both had read an article dealing with the cost of capital. As they vigorously discussed the concept, it became clear
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special types of preferred stock and the advantages and d isadva ntages of preferred stock. Review the basic types of leases, leasing a rrangements, the lease contract, the lease-versus-pur chase decision, the effects of leasing on future financing , and the adva ntages and d isadvan tages of leasing. Describe the basic types of converti ble securities, their general fea tures-incl ud ing the conver sion ratio, conversion period, conversion (or stock) value, and effect on earnings-and
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ambitions and values that have guided IBM since its inception, 100 years ago. As such, our performance in 2010 marks a fitting conclusion to our first century as a corporation, and a promising start to our second. In this letter, I will explain why the long-term thinking and management that IBM has practiced over the past decade have positioned your company advantageously for the next five years and beyond. 2 IBM today IBM’s performance in 2010 is indicative both of our high-value market position and
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handled by these intermediaries, including buying, selling, sorting, financing, storage, and transportation. The conventional channels of distribution involve many methods of getting products to the final consumer. These methods may include distribution from the manufacturer directly to the consumer, distribution from the manufacturer to a retailer to the consumer, and several others. From a strategic point of view, the term "supply chain management" connotes a holistic, systems approach to viewing
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To define accounting, is the process to identify measure and communicate economic information for the users of the information to come up with an informed judgement. (Association, n.d.). Standing the test of time, this definition defined the very purpose of accounting, which is to provide information to decision makers. As stated by this definition, accounting itself, is a process by which, financial reports are to be provided for the use of decision makers. Actually, Accounting is an information
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liability, ease of transferability, ability to raise capital, and unlimited life. 2. Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long- term profits. Presumably, the current stock value reflects the risk, timing, and magnitude of all future cash flows, both short-term and long-term. If this is correct, then the statement is false. 3. Could a company’s cash flow
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