1代写留学生财务管理assignment
Module 1-1
Module 1
Introduction
TBS 980
International Financial
Management
Module 1-2
OUTLINE
• Organisation types
• Nature of accounting
• Characteristics of accounting
information
• Relationships between financial and
management accounting
• Financial management concepts
Module 1-3
Types
• Manufacturers
• Retailers
• Service industries
• Not-for-profits
• Government
Goals
• Growth
• Profit
• Quality
• Leadership
Information needs
• Financial
• Production
• Personnel
• Environmental
• Legal
Organisations and information needs
Module 1-4
Organisation types
• Sole proprietorships (largest in actual
number but smallest in total sales
revenue)
• Partnerships
• Corporations (smallest in actual number
but largest in total sales revenue)
Module 1-5
Multinational Corporations (MNCs)
Definition
• A firm which operates in more than one
country
• A firm with production and distribution
facilities in more than one country
• MNC status is determined according to the
size of overseas activities
Module 1-6
Distinguishing features of MNCs
1. Foreign currency/FX
2. Economic and legal ramifications
3. Language differences
4. Cultural differences
5. Role of governments
6. Political risks
2
Module 1-7
Nature of Accounting
• Accounting is a service activity
• Its function is to provide “useful” financial
information for decision making
• Economic decisions relate to allocating
available resources effectively among
alternative choices
• It is a “business language”: accounting
terminology & symbols allows financial
information to be communicated more
effectively
Module 1-8
• Accountants are “preparers” of
information external and internal users
• Accounting has become increasingly
important with the separation of
ownership and control present in
large, public firms: owners not usually
involved in day-to-day operations
• Agency and corporate governance
issues
Nature of Accounting
Module 1-9
• Separate entity concept: assumes the
business is separate and distinct from its
owners
• Uses a standard unit of measure
• Provides identification, measurement, and
communication of financial information
about economic entities for interested
parties
Nature of Accounting
Module 1-10
The accounting process
Identification
Transactions
Measurement
Quantification
in money
terms
Recording
Recording;
classification;
summarisation
Communication
Accounting
reports
Analysis and
interpretation
Module 1-11
• Social structure will affect perceived needs,
acceptable goals, methods, etc
• Economic structure will affect reporting and
flow of resources
• Legal - laws and regulations will affect
acceptable accounting theory.
• Political environment influences accounting
• Religious - basic values of society & individuals
will help determine allocation of resources
Environmental factors
Module 1-12
Stakeholders
Stakeholder Decisions
Investors - buy/hold/sell shares
Creditors - levels and terms of credit
Suppliers - trading terms
Employees - wages/pension claims
Customers - quality, service standards
Government - taxation, environment
Public - economic, social &
governance
3
Module 1-13
Desirable characteristics of
accounting information
1. Understandable
- figures, graphs, commentaries
2. Objective
- unbiased, verifiable
3. Comparable
- compared and contrasted
4. Realistic
- views of reality (economic vs. legal)
5. Relevant
- make informed decisions
6. Reliable
- confidence, independent audit Module 1-14
Desirable characteristics of
accounting information
7. Consistent
- crucial to comparability
8. Timely
- stale news is irrelevant
9. Prudent
- degree of caution
10. Economy of presentation
- cost v benefits
11. Materiality
- amt and extent of aggregation
12. Usefulness
- ultimate yardstick
Module 1-15
Desirable characteristics of
accounting information
1. Understandable
- figures, graphs, commentaries
- accounting language often
regarded as a “code”
- terminology may be confusing
Module 1-16
Desirable characteristics of
accounting information
2. Objective
- unbiased, verifiable
- neutral
- should not influence decisions
according to a predetermined
outcome
Module 1-17
Desirable characteristics of
accounting information
3. Comparable
- contrast with information from
other sources
- comparisons with:
* expectations
* previous performance
* other organisations
Module 1-18
Desirable characteristics of
accounting information
4. Realistic
- must reflect the world and the
organisation: different realities
(economic v legal)
- economic form favoured by
accounting profession
- legal form may not necessarily be
consistent with the substance of
transactions and events
4
Module 1-19
Desirable characteristics of
accounting information
5. Relevant
- enables users to make informed
decisions
- different decisions may require different
information
- ideally, includes information about
consequences of decisions
Module 1-20
Desirable characteristics of
accounting information
6. Reliable
- readers must have confidence in
the information provided
- confidence can be reinforced by
perception of comprehensive
audit
- audit “expectations gap” and
possible misperceptions
Module 1-21
Desirable characteristics of
accounting information
7. Consistent
- crucial to comparability: must
be consistent in its scope and
preparation/presentation
- changing circumstances may
require a change in
presentation/restatements to
achieve realism
- impact of such changes
should be disclosed
Module 1-22
Desirable characteristics of
accounting information
8. Timely
- stale news is irrelevant
- financial statements should be
published as quickly, but...
- can take time to prepare
Module 1-23
Desirable characteristics of
accounting information
9. Prudent
- degree of caution
- financial statements may
contain information about
completed and uncompleted
transactions
- risks and uncertainties need to
be adequately considered
Module 1-24
Desirable characteristics of
accounting information
10. Economy vs Presentation
- cost v benefits
- preparation and audit of
statements is a costly process
- should be an attempt to ensure
that benefits exceed costs
5
Module 1-25
Desirable characteristics of
accounting information
11. Materiality
- recognises the impracticality of
reporting and recording every detail
of an organisation’s activities
- amount and extent of aggregation
impacts on the usefulness and
accuracy of information
- omission or misstatements: would
they influence the decisions taken
by users?
Module 1-26
Desirable characteristics of
accounting information
12. Usefulness
- ultimate yardstick
- if not useful, not worth preparing
Module 1-27
• Accounting: reactive rather than proactive
problems are addressed as they develop
• Increased emphasis of academic and
professional research to provide analysis
and identification of possible areas of
concern
Challenges facing accounting
Module 18-28
• Non-financial measurement: Necessary
to adequately assess performance,
liquidity and stability
• Forward-looking information:
accounting relies on historical costs
rather than projected values/events
Challenges facing accounting
Module 19-29
• Soft-assets:
Human resource accounting, valuing a
trained, dedicated work force,
entrepreneurial spirit, are not presently
valued on the financial statements
• Timeliness:
Audited financial statements provided
annually: little real-time information
Challenges facing accounting
Module 1-30
Accounting information systems
Financial accounting
– maintaining accounting records
– reporting past performance
– satisfying external users
Management accounting
– future orientated
– assisting internal managers in planning,
decisonmaking, control
– cash rather than profit orientated
Financial management
– securing necessary finance
– minimising “cost of capital”
6
Module 1-31
Interactions in Accounting and
Finance
Management
Accounting
Financial
Accounting
Financial
Management
A
A: Efficient
and effective
use of capital
D
D: Data collection,
accounting
records,
information
exchange
B: Profit B
measurement,
asset values,
impact of financial
policies
C
C: Tax, cash flows,
current and future needs Module 1-32
Management v Financial Accounting
Accounting System
(accumulates financial and
management accounting data)
Management Accounting
Information for decision
making, & control of an
organisation's operations.
Financial Accounting
Published financial
statements and other
financial reports.
Internal Users External Users
Module 1-33
Managers within
firm
Not required
Basic accounting
system plus
various other
sources
Interested outside
parties
Required - AASB,
Co. Law, tax law
Almost exclusively
from basic
accounting
system
Management v Financial Accounting
Users
Regulation
Sources of
data
Mgt Accounting Fin’l Accounting
Module 1-34
Future emphasis
Focuses on
specific projects
and processes
Emphasis on
relevance for
planning/control
Emphasis on
timeliness
Historical
perspective
Primary focus is
on the whole
organisation
Emphasis on
verifiability
Emphasis on
precision
Time focus
Subject
Verifiability v
relevance
Precision v
timeliness
Mgt Accounting Fin’l Accounting
Management v Financial Accounting
Module 1-35
Management accounting functions
1 Planning
– Goal identification
– Optimal resource flows
– Measure achievements
2 Control
– Measure actual v budgeted
– Cost, sales and budget reports
3 Decision making
– Provide information
– Provide advice and participate
Module 1-36
Management accounting functions
4 Capital projects
– Planning and monitoring programs
– Reconcile program with corporate plans
– Prepare medium and long term budgets
5 Performance evaluation
– How to include financial measures
6 Costs for financial accountants
– For annual and other external reports
7 Wider roles
– Economic and strategic reviews
7
Module 1-37
Financial management
• Concerned with managing financial
capital: involves accounting and
economics
• Key financial management decisions are:
– New investments
– Fixed asset replacements
– Capital raisings: issue new shares and bonds
Module 1-38
Occasional
Share issue
Bond issue
Capital
budgeting
Dividend
decision
Daily
Credit mgt
Inventory
control
Receipt and
disbursement
of funds
Goal:
Maximise
shareholder
wealth
Profitability
Risk
Trade-off
Functions of the Financial Manager
Module 1-39
Traditional financial management
• Financing and capital structure
– sources of finance & wealth maximisation
• Investment decision
– Assessing risk/return trade offs
• Dividend decisions
– payout ratio and effect on value of the firm
• Working capital management
– liquidity vs return
MNC risks
• Exposure to exchange rates
– cash flows
– demand
– input prices
• Exposure to foreign economies
– economic conditions affect demand
– currency restrictions
– overseas tax rate changes
• Exposure to political risks
– political actions affect cash flows
Module 1-41
Expanding role of financial
management
What factors have
increased the need for
financial management
information?
Increasing complexity and
size of organisations
Rapid development and
implementation of technology
Regulatory
environment
World-wide
competition
Increased
emphasis
on quality
Module 1-42
Short versus long term finance
Working Capital
• concerned with ST financing decisions
<1 year
eg managing cash and other current
assets
Capital Budgeting
• concerned with LT financing decisions
>1 year
eg purchasing a new machine in the
future
8
Module 1-43
The Risk-Return Tradeoff
↑ Profitability → ↑ Risk
↓ Profitability → ↓ Risk
e.g. investing in shares vs savings accounts
– Shares are more profitable but riskier
– Savings accounts are less profitable and less
risky (or safer)
Module 1-44
Financial versus Real capital
• Financial Capital (or Accounting Capital)
= money
• Real Capital (or Economic Capital)
= plant and equipment
Module 1-45
Equity versus debt securities
• Shares/stocks = ownership or equity
– Shareholders own the firm
• Bond/debenture = debt or IOU
– Bondholders are owed by the firm
Module 1-46
Private or Public Sector
• Traditionally profit orientation v service
orientation…public sector is becoming
increasingly “corporatised”
• Business-style management,
contracting, control and accounting
methods
• Breakeven replaced with desire for
surplus
• Internal servicing replaced by
decentralisation and transfer pricing
Module 1-47
Module 1
Introduction
TBS 980
International Financial Management