What You Will Cover
Fundamental Accounting Concepts – accounting vs finance, accrual vs cash accounting, revenue recognition methods, historical cost vs fair value accounting, the principles of conservatism, materiality and consistency.
Understanding Financial Statements – profit and loss account, balance sheet, statement of changes in shareholders’ equity, cash flow statement, consolidation of subsidiaries, accounting for affiliates (associated companies), accumulated other comprehensive income.
Understanding Double Entry Accounting – graphically, and using debits and credits
Evaluating Financial Statements – liquidity ratios, efficiency ratios, leverage ratios, profitability ratios, effect of leverage on ROE, Economic Value Added
Improving Profitability through Cost Analysis and Profit Planning – fixed vs variable costs, breakeven analysis, concept of contribution margin, incremental analysis for managerial decisions.
Making Effective Capital Expenditure Decisions – payback, net present value and IRR techniques, the flaws of payback and the pitfalls of IRR as decision tools, discounting of cash flows, profitability index for choosing between projects when resources are limited.
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