This topic area introduces candidates to the importance of the management of finance, the keeping of and analysis of accounts, and the assessment of business financial performance. Candidates need to understand: the basic principles and techniques of financial management; the value of financial statements and some key accounting techniques used to promote profit, measure performance and exert control in business organisations; the use of financial management information in managerial decision making; the links between financial management and other management activity; the importance of identifying and interpreting management accounting information, recognising uses and limitations. Central to the role of finance and accounting is an understanding of how information can be used to create and measure value.

AS Level Content —- Paper 1 & 2

The need for Business Finance>> Start up capital, capital for expansion
>> Working capital
Sources of Finance>> Legal Structure and sources of finance
>> Short & Long Term finance
>> Internal & External Sources
>> Factors influencing the sources of finance
>> Selecting the source of finance
Costs>> Cost information
>> Uses of cost information
>> Break even analysis
Accounting Fundamentals>> Income Statement
>> Statement of financial position
>> Liquidity ratios
>> Profitability ratios
>> practical use of ratio analysis
>> Main users of account
>> Limitations of published accounts
Forecasting and Managing Cash Flows>> Purposes of cash flow forecasts
>> cash flow forecast in practice
>> Method of improving cash flow

A Level Content

Costs>> Approaches to costing
>>Solutions to costing problems
Budgets>> The purpose of budget
>> Variances
Contents of Published Accounts>> The income statement
>> The statement of financial position
>> Inventory valuation
>> Depreciation
Analysis of Published Accounts>> Profitability ratio
>> Financial efficiency ratio
>> Gearing ratio
>> Investor ratio
>> Practical use of ratio analysis
Investment Appraisal>> The concept of Investment appraisal
>> Basic method of IA
>> Discounted cash flow methods
>> Qualitative factors in investment appraisal

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