Key Financial Statements and Credit Management Insights
Key Financial Statements
The four major financial statements are:
- Balance Sheet: Also known as the statement of financial position, it reports on a company’s assets, liabilities, and stockholders’ equity.
- Income Statement: Shows the profits and expenses over a period of time.
- Statement of Retained Earnings: Reports changes in retained earnings over a period.
- Statement of Cash Flow: Details changes in operating, investing, and financing activities.
Notes to Financial Statements
Notes are important to financial
Read MoreUnderstanding Market Structures and Cost Concepts
Cost Accounting and Economic Concepts
Costs (Pre-accounting) – Including financial transactions, amounts paid by the factors, or the acquisition of goods or services. Economically – Have been at all costs, independently of whether or not that reflects transactions amounts.
Types of Costs
- Total Cost – Value input in the process of obtaining a quantity of production.
- Fixed Costs – Do not depend on the volume of business (e.g., building rent, payroll of managerial employees).
- Variable Costs – Depend on
Leasing and Borrowing: Finance Options for Businesses
Leasing: A Comprehensive Understanding
Leasing contracts typically involve three parties:
- The lessor: Usually a financial institution or leasing company that owns the asset.
- The seller: The company that sells the asset to the leasing company.
- The lessee: The company that rents the asset.
Types of Leasing
Operating Lease: This is a typical lease agreement where the lessee has the right to use the asset during the contract period but has no intention of purchasing it later. Accounting codes: 621 (Rents
Boosting Productivity: Human Capital, Organization, and Technology
Experience enhances skills crucial for job performance. The combination of knowledge and skills, known as human capital, determines a worker’s productivity.
Organizational Impact on Productivity
The way a company is organized and managed significantly impacts productivity. Proper organization of resources, both physical and human, allows for better coordination and higher output.
Technological Change and Capital Investment
Improving machines and tools can dramatically increase production. From the invention
Read MoreKey Principles and Concepts in Economics
Four Core Principles of Economics
The four core principles are:
- Cost-Benefit
- Opportunity Cost
- Marginal
- Interdependence
Interdependency can be broken down into four types:
- Interdependency is between each of my individual choices.
- Interdependency is between people or businesses in the same market.
- Interdependency is between markets.
- Interdependency occurs over time; the choices I make today affect my future.
Rational Rule in Economics
Rational Rule for Buyers: Individuals use their self-interests to make choices
Key Economic Concepts: GDP, Inflation, and Development
Understanding Key Economic Concepts
Calculating GDP Using the Income Approach
How do we calculate GDP using the income approach? Which are all the incomes that should be included?
The income approach calculates GDP by summing all income and rents received by households, businesses, and governments. The incomes included are:
- Wages, salaries, and social contributions
- Rents, interest, and dividends
- Undistributed profits
- Mixed income
- Depreciation
- Direct taxes
Understanding Inflation
Explain how inflation works
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