Finance & Accounting for Non-finance professionals

Discover why accounting matters for individuals and businesses, tracking spending, revealing revenues, costs, and profits, and enabling filings with regulators and tax calculations.

Understand how a typical income statement presents revenues, subtracts direct and indirect costs to derive ebitda, subtracts depreciation to reach ebit, subtracts interest and taxes to reveal profits after taxes.

Record the second transaction by recognizing a 7,500 cash inflow from the bank and a 7,500 long-term debt liability. Update the balance sheet to reflect total cash of 10,000.

Record the ninth transaction by calculating taxes on earnings before taxes of 250 at 40%, yielding post-tax profit of 150 and reducing cash by 100 in the balance sheet.

Reinvest profits earned this year by increasing shareholder equity by $150, reflecting net profit, and ensure the balance sheet balances with assets and liabilities totaling $12,475.

Explore how to analyze a company's financial performance through operating and financing health, and benchmark outcomes using a scorecard framework that calculates key metrics and ranks four real-life companies.

Explore the parameters to measure company performance by examining operating health including profitability, capital efficiency, and growth, and financing health including capital structure and liquidity, with methods to calculate each.

Calculate the invested capital turnover ratio by dividing revenues by invested capital to measure capital efficiency, revealing revenue per dollar invested and signaling better performance when the ratio rises.

Assess a company’s financing health through leverage, defined as total debt divided by total equity; a lower debt-to-equity ratio signals less reliance on external borrowings and greater flexibility.

Download the annual report for listed companies from the company website to begin performance assessment. It provides qualitative and quantitative data, including the income statement and balance sheet.

Compute Alpha's pre-tax ROIC by dividing EBIT 1450 by invested capital 14150, where invested capital equals total debt 4450 plus equity 9700, yielding about 10%.

Calculate the invested capital turnover for Alpha by dividing revenues by invested capital. Derive a 60% ratio from revenues of 8,500 and invested capital of 14,150.

Calculate eight financial performance metrics for Alpha and extend the same calculations to beta, gamma, and theta to enable a cross-company comparison.

Plot the four financing health metrics, including the total debt to total equity ratio, for Alpha, Beta, Gamma, and Theta, and learn how to assess these metrics across the companies.

Rank operating health by the revenue growth metric. Alpha and gamma lead with around 20% growth (green), theta around 15% (orange), beta at 0% (red).

Evaluate four companies across eight metrics with a scorecard framework, rule out Theta and Beta as underperformers, and conclude Alpha is the top performer.

Assess company performance through operating health and financing health metrics using a scorecard framework with eight metrics to rank four sample companies and identify the top performer.

Determine how the market value of shareholder equity reflects a company's valuation, the price to buy ownership rights, and the broad approaches to estimate it using balance sheet concepts.

Learn how valuation approaches differ by a company's life-cycle stage—early, high-growth, and mature—driving decisions from pre-revenue ideas to profitable, stable businesses.

Early stage companies lack a scientific approach to valuation, so valuation relies on a negotiation-based approach due to uncertain financial performance. The valuation method depends on the company lifecycle stage.

Evaluate the valuation of a fast-growing online retailer using a sales multiple approach, given five years of operation, current revenue of 5 million, and no profits.

Illustrates how a stable IT services company's dividends of 80 million are valued using the discounted cash flow approach, accounting for reinvestment and residual profits.

Value a company by the present value of its future cash flows using the discounted cash flows approach, recognizing dividends as cash flows to shareholders.

Learn how to project free cash flows into the future by assuming a stable, forever going concern with a constant annual cash flow of 80 million.

Explore the time value of money and the present value of future cash flows, using a fixed-deposit example to show how today's 100 becomes 105 and beyond.

Use the present value concept and discounted cash flows to value an IT services company, calculating future cash flows at 10% and summing to about $800 million.

Apply the discounted cash flows approach to value a company by summing the present value of future cash flows, i.e., profits minus reinvestments that become dividends, using a return expectation.

Explore four valuation methods by company lifecycle, focusing on the negotiation based approach for early stage startups, calculating value as funding needed divided by the equity percentage offered.