Summary

Summary Chapter 1-3-4-5-6 of Accounting & Finance by Ewoud Jansen

3 purchases

Course
Introduction to Finance and Accounting

Institution
Fontys Hogeschool (Fontys)

Chapter 1-3-4-5-6 of Accounting & Finance by Ewoud Jansen Includes the subjects Financial Statements, Time Value of Money, Equity Financing, Debt Financing and Ratio Analysis One part in the summary is not 100% readable so I put it here for you A = Annuity P = Perpetuity S = Sum (single am...

[Show more]

Preview 2 out of 7 pages

View example

Uploaded on January 23, 2021
Number of pages 7
Written in 2020/2021
Type Summary

financial statements
equity financing
debt financing
ratio analysis
time value of money

Institution
Fontys Hogeschool (Fontys)
Education
International Business
Course
Introduction to Finance and Accounting

fleurme01

Member since 4 year 53 documents sold

Available practice questions

Formulas Ratio Analysis

Flashcards 23 Flashcards

Free 2 sales

Flashcards 23 Flashcards

Free 2 sales

Some examples from this set of practice questions

Book value per share

Answer: total equity / outstanding shares

preferred dividends

Answer: preferred interest rate * preferred stock

Mezzanine Finance

Answer: Subordinate debt preferred stock

Current Ratio

Answer: current assets/ current liabilities

quick ratio

Answer: (current assets - inventory) / current liabilities

Net working capital

Answer: current assets - current liabilities

debt ratio

Answer: total debt / total assets

debt to equity ratio

Answer: total debt / total equity

Times Interest Earned

Answer: EBIT / Interest

10.

Return On Equity (ROE)

Answer: annual profit / equity

$5.91

Add to cart

Add to wishlist

100% satisfaction guarantee
Immediately available after payment
Both online and in PDF
No strings attached

Introduction to Finance and Accounting
Semester 1b – summary

Chapter 1: Financial Statements
1.1Balance Sheet
The balance sheet is an overview of the financial situation of a company at a particular
moment in time.
Each financial transaction that happens influences the balance sheet  balance sheet
mutations.
Assets  resources that a company owns, displayed on the debit side of balance sheet, you
always put them from highest to lowest.
 Assets that can be used more than once are known as non-current assets or fixed
assets. Examples of these assets are cars, equipment, buildings etc.
 Assets that can be used only once are knows as current assets, examples of these
assets are inventory.
Financing Sources Always on the credit side
 Equity: amount of money that the owners have invested in the company
 Non-current liabilities: long term financial obligations of the company to others (long
term loan/ mortgage)
 Current liabilities: short term obligations, amounts the company still needs to pay to
the owner, trade payables, short term (within 1 year)
Assets: equity + liabilities
There must always be an equilibrium on the balance sheet, this means that the debit and
credit side are equal.
Accounts receivable  debit
Trade Payable  credit
The equity increases when
- There is a direct investment by the owner
- There is reinvestment of the profit in the business
Equity decreases when
- Direct capital withdrawal by owner
- Business realizes a loss
Equity = assets – debts
Equity = original equity +/- profit/loss + capital injections – capital withdrawals
Sometimes you need to calculate the depreciation. This is only done for non-current assets.
You calculate the depreciation by:
(value- scrap value)/ amount of periods

Redemption = paying back money you borrowed ( = paying back a loan)
Receivables → when you don’t receive the cash yet but do deliver the product already
Pre-paid → when you have paid for something already.

, 1.2 Income Statement
= profit and loss statement, it shows the revenues and expenses over a certain period of
time.
Revenues  Monetary value of goods and services sold
Expenses  Monetary value of production means used.
Having revenues is not the same as receiving money.
Cash Basis Accounting: only recognizes a transaction when you spend or receive money
(e.g. when you cash a check) this form of accounting is better if you deal with customers and
have a lot of transactions.
Accrual Basis Accounting: recognizes a transaction when money is earned buy noy
exchanged (e.g. sending an invoice) this method is best if you deal with large businesses
and don’t always get paid right away.
Depreciation = the loss of value of tangible fixed assets.
This is an expense because you used the asset and now Symbols
it is worth less, depreciation is never a payment. A Annuity
Sales
Expenses P Perpetuity
COGS
S Sum (singleProfit
Gross amount)
- Cost of goods sold  cost of producing or R Discount
Overhead (expressed
rate in %) (6% =
costs + depreciation
acquiring the goods or services sold. 0.06)
- Operating expenses  expenses related to the EBIT
N Number of periods
Interest
operations of the company like: selling, general & G Growth
administrative expenses, salaries, rent, property EBT rate (expressed in %)
PV Present
Tax Value
taxes, depreciation
- Financing expenses  interest expenses, lease FV Future
Net Value
income
expenses
- Income tax  the income is taxed by the government
Gross Profit = the difference between revenue and costs of goods sold
Costs of producing and acquiring goods or services are charged to the income statement in
the period they are sold

1.3 Cash Flow Statement
Receipts = all the money that flows into the firm over a certain period
Payments = all the money that flows out of the firm over a certain period.
Net Cash Flow  difference between cash receipts and cash payments

Chapter 2: Time Value of Money
2.1 Simple and Compound Interest

Simple Interest is calculated by:
Interest = principal * interest rate * number of periods
With compound interest you also gain interest over interest. You can calculate this with the
following formulas:
Future Value = S * (1 + r) n
Present Value = S * (1/(1+r)n)

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller fleurme01. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $5.91. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

69411 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling