This module will enable the learner to understand the basic financial principles, evaluate financial statements and to understand the contents and working of budgets.
Learning modules
Module 1: Understanding Financial statements
Module 2: Analysing Financial statements
Module 3: Operating Capital
Module 4: Budgeting
OUTCOMES
Describe the contents of a company’s financial statements
Describe the difference between income and expenditure
Explain the difference between Assets, liability and equity and to distinguish
between long term and short-term assets and liability
To practically demonstrate the double entry system and to apply the formula E= A-L
Describe the difference/ relationship between income/ turnover, cost of sales,
Gross profit, operating expenses and net profit.
After completing this unit you should be able to calculate the following financial ratios and explain the use of each one:
Liquidity ratio
Activity ratio
Debt ratio
Times interest earn ratio
Different profit margins
Difference between mark up and gross profit
Understand the difference between fixed and variable cost
Cost – volume – profit analysis
Break-even point
Calculate the cash conversion cycle of a business.
Explain the importance of the management of the cash conversion cycle
Explain the importance of managing debtors, stock levels and creditors
