ENGINEERING TRIPOS PART IIB – 2012/2013

Module 4E6 - Accounting and Finance

AIMS

This module aims to provide an introductory understanding of financial reporting and decision making by companies. The first part of the module examines fundamental accounting concepts, and shows how to construct and interpret company accounts, a critical source of information to outside investors. The second part of the module tackles the three key areas of company decision making: the capital budgeting decisions of how the company should invest; the financing decisions of how the company should raise the investment capital; and the payout decisions of how the company should compensate its shareholder

LECTURE SYLLABUS

• Financial Accounting
  Detailed discussion of fundamental accounting concepts; construction of company financial statements (balance sheet, income statement, cash flow statement); interpretation of company financial statements (ratio analysis); an awareness of creative accountin
  
  
• Finance
  Nature and objectives of finance; time value of money and risk versus return; capital budgeting decisions (opportunity cost of capital, investment rules such as Net Present Value; financing decisions (debt versus equity); payout decisions (dividends and share repurchases).
  
  

OBJECTIVES

On completion of the module, students should:

• be able to construct the company financial statements from a jumble of raw data;
• be able to interpret these statements using financial ratios;
• have learnt how to identify and finance the investments companies should undertake;
• have learnt why and how companies compensate their investors;

REFERENCES

Please see the Booklist for Group E Courses for references for this module.

Last updated: August2012