Financial & Managerial Accounting Mbas: Oanhnguyenth231
Financial & Managerial Accounting Mbas: Oanhnguyenth231
Financial & Managerial Accounting Mbas: Oanhnguyenth231
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OANHNGUYENTH231
Financial Accounting versus
Managerial Accounting
Generates Generates
general-purpose special-purpose
financial reports financial reports
Measurement expressed
Emphasis on
in financial and
objective data—measured
nonfinancial terms,
in financial terms
such as time and quality
Income Statement
Concerned with keeping records of assets, obligations, and
Statement of
Cash Flows
collection andFinancial
payment of cash.
Statements
Generated
Statement
Balance of
Sheet Stockholders’
Equity
MODULE 1
Financial Accounting for MBAs
Companies
Plan business activities,
Finance those activities,
Invest in those activities,
Then engage in operating activities
Year Phase
2020-2021 Preparation
2022-2025 Phase 1: Voluntary application
After 2025 Phase 2: mandatory application
The accounting equation works for all companies at all points in time.
Reports cash inflows and outflows from operating, investing, and financing
activities over a period of time.
Ball, R., and P. Brown. 1968. “An empirical evaluation of accounting income numbers.” Journal of Accounting Research (Autumn): 159–178.
If the ratio is high, then the company can repay its debt
more easily and can incur more debt than companies that
have lower ratios
© Cambridge Business Publishers, 2018 45
DEBT/EBITDA—earnings before interest, taxes, depreciation, and amortization
Industry competition. Competition and rivalry raise the cost of doing business.
Bargaining power of buyers. Buyers with strong bargaining power can extract price
concessions.
Bargaining power of suppliers. Suppliers with strong bargaining power can demand
higher prices.
Threat of substitution. As the number of product substitutes increases, sellers have less
power to raise prices and/or pass on costs to buyers.
Threat of entry. New market entrants increase competition and companies must
expend monies on activities such as new technologies, promotion, and human
development to erect barriers to entry and to create economies of scale.
Product differentiation
Technological innovation
Product design
Marketing, distribution, and after-sale customer support
Cost leader
Access to low-cost raw materials or labor
Manufacturing or service efficiency, and
Manufacturing scale efficiencies, greater bargaining power with
suppliers, sophisticated IT systems, etc.
© Cambridge Business Publishers, 2018 54
Learning Objective 6
Appendix 1A
Access reports filed with the SEC.
Appendix 1B
Describe the accounting principles
and regulations that frame
financial statements.
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