Basics of Financial Management - Boekhandel Krings

Basics of Financial Management

Rien Brouwers MSc. Wim Koetzier MSc.

Third Edition

? Noordhoff Uitgevers bv

Basics of Financial Management

Rien Brouwers Msc. Wim Koetzier Msc.

Third edition Noordhoff Uitgevers Groningen/Houten

Cover design: GK Designers, Groningen/Amsterdam Cover illustration: iStockphoto

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Any comments about this publication or others may be addressed to: Noordhoff Uitgevers bv, Afdeling Hoger Onderwijs, Antwoordnummer , VB Groningen, e-mail: info@noordhoff.nl

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? Noordhoff Uitgevers bv Groningen/Houten, The Netherlands

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ISBN (ebook) ---- ISBN ---- NUR

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Preface third edition

Basics of Financial Management offers a complete introduction to the subject. It can be used by undergraduates in higher economic education programs, but is also suitable as a basic course for non-economic academic programs.

Part of this book offers a fully-fledged introduction to financial management, in which the student becomes acquainted with the functioning of companies and the most important underlying economic aspects. Parts , and discuss the disciplines of finance, management accounting and financial accounting. These parts can be studied in random order.

In this third edition, there is a seamless connection between Basics of Financial Management and the Dutch version Basisboek Bedrijfseconomie. The result being that both books have an international perspective. The institutional aspects (such as tax and corporate law) that are important for the Dutch context, are also discussed in the English edition.

In the third edition, we have used American English instead of British English. As a consequence, the third edition deviates from the previous edition on a number of points, in particular where it concerns financial terminology.

Some topics have been added, which were not (or only briefly) discussed in the previous edition. These concern the influence of the cash flow cycle on working capital, uncertainty with regard to capital budgeting, the balanced scorecard and customer profitability analysis. Of course, where necessary, the contents have been updated.

Test questions and multiple-choice questions are incorporated in the Basics of Financial Management. The answers to these questions are provided at the back of the book.

The accompanying Exercise book contains a large number of questions and cases of increasing difficulty. A part thereof is fully explained in the Answers and Solutions. The remaining answers can be found in the teacher's section of the website: basicsfinancialmanagement.noordhoff.nl. The student's section of the website contains interactive questions and a definition trainer.

Since the first Dutch edition over a quarter of a century ago, the book has been widely taken on board. We hope this third English edition will be the basis of a successful continuation.

All remarks or comments by users, both students and teachers, are very welcome.

The authors

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Contents

Introduction

PART 1 Financial management in business

1 Businesses and their role in the economy

. Consumers and manufacturers . Profit and non-profit organizations . Business activities . Legal forms of businesses . Value added tax . Types of cooperation between companies

Glossary Multiple-choice questions

2 Financial management disciplines and positions

. Financial management disciplines . Relationships to other disciplines . Positions in financial management

Glossary Multiple-choice questions

3 Financial statements

. Investment and financing . Balance sheet and income statement . Profit versus cash flow

Glossary Multiple-choice questions

4 Business plan

. Businesses in Europe and the Netherlands: facts and figures . Purposes of the business plan . Key features of the business plan

Glossary Multiple-choice questions

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PART 2 Finance

5 Capital budgeting

. Capital budgeting and cash flow . Assessment based on period profit . Assessment based on cash flow . Assessment based on cash flow, considering time value of

money . Leasing

Glossary Multiple-choice questions

6 Working capital management

. The cash flow cycle . Inventory management . Receivables management . Cash management

Glossary Multiple-choice questions

7 Equity

. Equity in companies with a non-legal entity status . Equity in companies with a legal entity status . Share value . Reserves . Issue of shares

Glossary Multiple-choice questions

8 Liabilities

. Liability costs . Bank loans . Bonds . Short-term liabilities . Provisions

Glossary Multiple-choice questions

9 Assessment of the financial structure

. Ratio analyses . Profitability ratios . Solvency ratios . Liquidity ratios

Glossary Multiple-choice questions

10 Financial markets

. Investments in securities . Options . Futures . Investment ratios

Glossary Multiple-choice questions

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