Peter Zhang

UGBA

Module 1: Finance

Balance Sheet

The balance sheet is a snapshot of a company’s finances. Assets are controlled by the company and help it generate revenue.

Current assets can be converted to cash within a year and comprise cash and inventory (unsold goods). Fixed assets are used to make the product such as equipment and building. Intangible assets are patents and the brand. When a company pays for “goodwill”, usually that goes towards intangible assets.

Liabilities are legally committee and represent a future economic sacrifice. Accounts payable is money owed to other people. Deferred revenue and customer deposits comprise advanced payments where the company has yet to provide the good or service.

Income Statement

The income statement measures the operating performance of a company during a period.

Revenue or sales refers to cash and accounts receivable from the normal operation of the business. Expenses are funds used to provide the good or service. The cost of goods sold (COGS) or cost of revenues are the subset that is the cost of the inventory itself. Gross profit is revenue - cost of goods sold. The profit or loss is revenue - expenses. Non COGS expenses include research and development and other selling, general, and administrative.

Cash Flow

The statement of cash flows describes a firm’s cash receipts and cahs ayments. It explains change sinc ash across consecutive balance sheets.

Equity comprises what you own and what you owe. Operating activities are directly related to earning income. Investing activities involve acequiring and disposing of long-term assets. Financing activities involve acquiring and repaying funds.

Earned revenue means delivery has occurred. Realized revenue means cash collection is reasonably assured. The dupoint formula decomposes return on assets into net profit margin.

ROA = net porfit margin * asset turnover Net income/net sales * net sales/average total assets

Startups usually start with friends and family. Then, they move to angel investors and VCs.

Time Value of Money

The value of money is greater now, which is why banks charge an interest rate on loans.

Module 2: Operations

  • Operations management is the design, direction, and control of processes, activities which turn inputs to outputs, clustered in operations or linked together to form a supply chain.
  • Inputs include human resources, capital, purchased materials and services, land, and energy. Outputs can be goods or services.
  • Processes rely on internal suppliers (e.g. employees with materials) and external suppliers (business and individuals) to service internal customers (e.g. employees at the firm) and external customers (end users or intermediaries).
  • A nested process is a process within a process.
  • Manufacturing processes produce physical products with little customer contact; service processes produce experiences with high customer contact.
  • A core process delivers value to customers, while a support process provides resources and inputs.
  • Operations provides products for marketing which supports a company’s finances and, in turn, raw inputs for operations.
  • Operations management sould be informed by corporate strategy, which is an overall direction that carries out an organization’s functions: environmental scanning, core compoetencies, core processes, global strategies
  • Market analysis involves segmented a firm’s customers and identifying their needs based on price, quality, customization, delivery, volume, etc.
  • Competitive priorities are the dimensions of a process or supply chain that are most important for customers. Competitive capabilities are the cost, quality, time and flexibility dimensions where a process or supply chain can deliver. A good operations strategy closes the gap between capabilities and priorities.
  • Dimensions can be order qualifiers (required to do business) or order winners (used to differentiate services or products).
  • Trends in operations management:
    • Productivity improvement - cross-border and IT investment is increasing labor and machine productivity.
    • Global competition - triggered by five forces: transport and communication, loose financial regulations, increased demand, reduce trade barriers, comparative cost advantages
    • Ethics, diversity, environment - operations managers are considering integrity

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