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Summary BE4: The Basics of financial management Chapter 14 - 18, ISBN: 9789001889210 Business Economics 4 (BE4) $4.35
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Summary BE4: The Basics of financial management Chapter 14 - 18, ISBN: 9789001889210 Business Economics 4 (BE4)

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A clear summary on the topics that are most likely asked in the BE4 test together with examples and definitions of concepts.

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  • Chapter 14 to 18
  • May 27, 2021
  • 10
  • 2020/2021
  • Summary

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By: olie • 2 year ago

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BE4 Summary

Table of content
Direct method and Indirect method............................................................................................................... 2
Direct method:......................................................................................................................................................2
Indirect method:...................................................................................................................................................3

LIFO / FIFO / WAC.......................................................................................................................................... 4
LIFO:......................................................................................................................................................................4
FIFO:......................................................................................................................................................................4
WAC:.....................................................................................................................................................................4

Product matching & period matching............................................................................................................. 4
Product matching:................................................................................................................................................4
Period matching:..................................................................................................................................................4
Example:..........................................................................................................................................................4

Depreciation.................................................................................................................................................. 5
Straight line depreciation.....................................................................................................................................5
Example table:.................................................................................................................................................5
Percentage depreciation.......................................................................................................................................5

Shares........................................................................................................................................................... 5

Chapter 14..................................................................................................................................................... 7

Chapter 15..................................................................................................................................................... 8

Chapter 16..................................................................................................................................................... 9

Chapter 17..................................................................................................................................................... 9

Chapter 18................................................................................................................................................... 10

, Income statement (profit & loss
statement)

Sales
- Cost of sales
= gross profit
- Costs
= EBIT (earnings before interest & tax)
- Interest
= profit before taxes
- Taxes
= profit after taxes




Direct method and Indirect method

Direct method:
It depends, you have to put in the receipts,  accounts receivable
Payments for purchases  inventories, accounts payable
Investments  fixed assets
Did the fixed assets go up or down? If they went down, is it because of depreciation? Or depreciation in
combination with investments?
Financing  equity, long term loans

Direct method notes:
If you buy new machines, old ones are sold
Capital share + share premium reserve = share issue
Profit can be divided  dividend & retained profit
Original value of a share: par value
Difference price you sell shares for and par value: share premium
Every time you pay something, its negative on the cash flow statement

Start:
CF operational activities
- Receipts
Sales revenue +/- accounts receivable (if acc rec ^ = -, if acc rec v = +)

Payments: (always minus - )
- Purchases: inventories 1 + purchases ? = ? – cost of sales = inventories 2
Acc pay 1 + purchases = ? – payments ? = acc pay 2

Other expenses:
- Operating costs
- Interest
- Tax (the first tax payable)

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