The course consists of seven modules:
Module One – The Foundation
Contains a theoretical and practical description of the fundamentals of accounting principles and recording procedures, double entry, the accounting equation and balance sheets, trial balances, income statements, cash flow statements for each typical transaction throughout the first four years of the activity of the firm.
The knowledge and skills are used in preparing financial statements for seven accounting periods: Month 1 Year 1; Quarter 1, Quarter 2, End of Year 1, End of Year 2, End of Year 3 and End of Year 4.
Module Two – Operating the Firm
From this point onward your knowledge and skills in financial accounting will be developed through “managing” a simulated firm, BIS Ltd., during four years and seven accounting periods. You will operate cash flows, perform typical transactions, and prepare and interpret financial statements.
A systematic operation of the firm in a spreadsheet format in which all typical transactions carried out by the firm are entered from the start of operations, the initial capital provision by the Owners, and the preparation of Journals, worksheets of Balance Sheets, Income Statements, Statement of Cash Flows, Statements of Cash Flows, Trial Balances and Final Financial Statement, in each period to the end of the fourth fiscal year.
Operating the interactive AccountingLab cements the knowledge acquired throughout Module Two. It teaches the impact of individual Typical Transactions on every component of Balance Sheets and Income Statements and it influences cash and profits.
Module Three – Cash Management and Profitability Analysis:A quantitative analysis of the economic performance of shareholder’s investment in the firm including liquidity and profitability ratios, efficiency ratios and leverage ratios under varying scenarios of financial targets of solving cash deficits, recovering of invested capital and return on equity.
Having learnt to prepare financial statements now we proceed to learn how to use and analyse the information contained in those financial statements: (i) how to calculate, interpret and use financial ratios; (ii) how to plan and take action to avoid cash deficits during the life of the company; (iii) how to implement actions to reach targets in profitability.
Module Four – Strategic Financial Management
“What If” scenarios for key target variables, such as, liquidity and profitability under different changing scenarios of unit prices, increase in market share, decrease in expenses, increase in Supplier’s credits and increase in borrowing to achieve the policy targets.
Carry out simulations using the Business Simulation Game to learn in a practical way how to analyse the impact of changes in capital, market share, unit prices, running expenses and borrowing on Liquidity and Profitability, Cash Management, and Payback Period.
Module Five – Investment Decision Analysis
A quantitative analysis of the economic performance of shareholder’s investment in the firm including Net Present Value, Internal Rate of Return, Pay Back Period and Break-even Point.
It uses ‘What if’ cases for “hands-on” experience in changing the company’s cash flows by varying capital, unit prices, quantities of licenses sold, increasing/decreasing costs, etc. and borrowing to measure the effect of these changes on key indicators such as liquidity and profitability and also on key indicators such as return on capital invested.
On completion of this section the student will be able to carry out investment decision analysis by making extensive use of cash flows for four years of operations of the firm, the theory and practice of time value of money, net present value (NPV), internal rate of return (IRR), break-even point (B/E) and payback period.
Module Six – The Business Simulation Game
Carry out simulations using the Introduction to the Business Simulation Game methodology to learn in a “gaming environment” how to analyse the impact of changes in capital, market share, unit prices, running expenses and borrowing on the main indicators of the firm’s performance: Income Statements and the Balance Sheets from Y1 through Y4.
Business simulation gaming is performed to measure the effect on key financial targets such as liquidity (solvency), profitability (Return on Capital Invested (ROI) and Return on Equity (ROE), Payback and Break-even) and payback brought about by changes in the company’s cash flows and financial statements. Such changes are caused by investment and management actions in the key decision making variables: capital, market share as measured by number of licenses sold, increase/decrease of unit prices, increasing/decreasing operating costs and borrowing from banks.
To carry out simulations to analyse the impact of changes in capital, market share, unit prices, running expenses, borrowing and suppliers credits on the main indicators of the firm’s financial performance: liquidity, payback, break-even, profitability, Net Present Value (NPV) and Internal Rate of Return (IRR).
Module 7 – A Business Plan – A Case Study
The case study is s based on BIS Ltd. as a theoretical example on how to apply in a ‘real’ world’ scenario the learning acquired throughout the course.
The owners of BIS Ltd. Have prepared a business plan to source funding for the firm.
The business plan is to be submitted to potential investors and banks.
The student will:
(i) Acquire the know-how to prepare an investment proposal to potential providers of capital, whether individual investors on the firm, BIS ltd., or to obtain a loan from a bank;
(ii) Understand the process to prepare a business plan showing the main aspects of interest for a provider of capital: market share, technology, unique selling points of the educational product, the management team and investment analysis: Net Present Value and Internal Rate of Return, Payback Period and Break-even Point;
(iii) Learn how to write a business plan showing the strengths and risks of an investment proposal to a potential investor or lender.
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