F.I.E.L.D. Immersion Program Dr. Shaun William

Transcript:F.I.E.L.D. Immersion Program Dr. Shaun William:
F.I.E.L.D. Immersion Program Dr. Shaun William Davies, CFA July 25, 2018 1 Business Economics A Few Words About Me 2 Assistant Professor of Finance Leeds School of Business, University of Colorado at Boulder Finance PhD (UCLA 2013), Economics MA (UCLA 2010) CFA Charterholder Research in Venture Financing, Exchange Traded Funds (ETFs), and Impact Investing & Socially Responsible Investing (SRI) Outline of Today 3 Financial Statements Income Statement, Balance Sheet, and Statement of Cash Flows Cash Conversion Cycle Break-Even Analysis Essentials of Food Industry Accounting Big Ideas in Valuation – How much is it worth? Valuation Methods Budget Building Economic Tradeoffs Financial Statements – Some Lingo 4 Stocks and Flows Stocks represent the total quantity of something Sometimes referred to as accounts Flows represent the change in quantity over some time interval You deposit $1,000 monthly into your checking account After one year, the stock of the account is $12,000 and the monthly flow is $1,000 Assets Financial, physical, and intangible items owned by a business Financial: cash and marketable securities Physical: inventories Intangible: trademarks and patents Depreciation is the decay of an asset’s value The total value of an asset is a stock variable The change in value of an asset is a flow variable Financial Statements – Some More Lingo 5 Liabilities Items owed by a business Payables: amount owed to suppliers Accrued Wages: amount owed to employees Debt: amount owed to lenders The total value of a liability is a stock variable The change in value of a liability is a flow variable Owner’s Equity Residual Claim that absorbs the value of the business after all liabilities are taken care of Amount owed to owners Total value is a stock and the change is a flow Financial Statements – The Statements 6 Balance Sheet A snapshot of a business’s stocks on a specified date (fiscal year end or quarterly) All assets appear on the left side of the sheet All liabilities and owner’s equity appear on the right Accounting Identity: TOTAL ASSETS = TOTAL LIABILITIES + OWNER’S EQUITY The identity is useful in navigating or forecasting financial statements Income Statement A snapshot of a business’s flows during a specified period For example, Cost of Goods Sold is a flow that affects the value of the Inventory stock Financial Statements – Balance Sheet 7 Financial Statements – Net Income 8 Net Income is the bottom line on the income