PREPARE A CONCEPT MAP OF THE FOLLOWING: FROM CHAPTER 1 TO 8

CONNECT THE FOLLOWING CHAPTERS TO EACH OTHER (THEIR RELATIONSHIPS)

CHAPTER 1

1. Discuss an overview of financial management and its objectives
2. Understand how businesses generate value for their owners
3. Evaluate the 3 forms of businesses
4. Compare common and preferred shareholders and their rights
5. Prepare a statement of retained earnings and shareholders equity section of a balance sheet

CHAPTER 2

1. Explain the four basic financial statements
2. Prepare the income statement and balance sheet
3. Calculate and understand the meaning of earnings per share, payout ratio, price-earnings ratio, net assets, working capital, solvency, and book value per share
4. Understand how the statement of cash flows works and how it is affected by changes in the balance sheet
5. Understand the tax issues in connection with corporations, and to be able to calculate after-tax values

• Step 1 Understand the types financial statements
• Step 2 Understand some basic ratios, how to calculate them, and where to find the information you need on the financial statements (this will continue in Chapter 3)
• Step 3 Understand how to interpret what the financial statements and ratios can tell us about the companys financial performance and financial management (Chapter 3 and our ratio project)

CHAPTER 3

1. Calculate a selection of financial ratios
2. Utilize the above ratios in financial analysis to tell us the financial story about a company
3. Understand the use, and limitations, of financial ratios in analysis of financial statements
4. Make decisions about lending to, or investing in, a fictional company

CHAPTER 4

1. Explain the purposes and challenges of budgeting
2. Prepare necessary schedules to complete a cash budget and pro-forma financial statements
3. Apply the Percentage of Sales method to estimate the need for new funding resulting from an estimated growth in sales

CHAPTER5

1. Explain the difference between fixed and variable costs and their impact on a company
2. Calculate and interpret the break-even analysis and contribution margin ratio
3. Calculate and interpret the degrees of operating, financial and combined leverage

CHAPTER 6

1. Explain the relationship between assets and their financing
2. Understand the nature of current assets, including permanent and temporary current assets
3. Understand issues involved in current asset management, such as the level of current assets to keep on hand
4. List the characteristics of short and long term financing

CHAPTER 7

1. Understand effects of AR on cash flow and net income by reducing or increasing AR
2. Calculate the effects on net income of different AR collection policies and their effect on sales and available cash
3. Understand effects of inventory on cash flow and net income by reducing or increasing inventory
4. Calculate the cost of carrying and ordering inventory
5. Determine the optimal timing of inventory orders in order to reduce carrying and ordering costs

CHAPTER 8

1. Understand current liabilities as a form of financing
2. Compare loans by determining the effective interest rate
3. Explain why trade credit (AP) is an important form of short-term financing
4. Determine the effective interest rate of foregone discounts on AP