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- Politecnico di Milano
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- Management Engineering
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- Accounting, Finance & Control
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- English
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- Notes · Complete set
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NotesComplete setEnglish
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Complete course materials for Accounting, Finance & Control in the Management Engineering degree programme at Politecnico di Milano. The document covers: LEZIONE 1 17/09→ ACCOUNTING Accounting is measurement, processing and communication of financial information about a company or organization. The goal is to measure the results of economic activities (for example sales, costs, investments) and provide this information to people
Accounting, Finance & ControlComplete set
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Complete course materials for Accounting, Finance & Control in the Management Engineering degree programme at Politecnico di Milano. The document covers: LEZIONE 1 17/09→ ACCOUNTING Accounting is measurement, processing and communication of financial information about a company or organization. The goal is to measure the results of economic activities (for example sales, costs, investments) and provide this information to people
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LEZIONE 1 17/09→ ACCOUNTING Accounting is measurement, processing and communication of financial information about a company or organization. The goal is to measure the results of economic activities (for example sales, costs, investments) and provide this information to people who need it: managers, investors, banks, regulators, or other stakeholders. Accounting has two main areas: Management Accounting and Financial Accounting. Financial account is a periodic analysis about the wealth of the organization. All the documents provided by financial accounting can be viewed from external people, so it has an external purpose. It is based on historical and past data and produces official financial statements (like the balance sheet or income statement; in fact the financial accounting is written at the end of the year). On the other side Management Accounting is used mainly for internal purposes. It helps managers make everyday decisions, often looking at current and future trends. Financial accounting follows a precise process. - Events: something happens in the company that has a financial impact (for example, selling goods, buying equipment, or paying salaries). - Rules and management choices: the event must be recorded according to international accounting standards (IAS-IFRS). These standards define: ● where to register the event ● what to register ● how to register it - Financial statements: the results are summarized in annual or interim reports. The information in these reports must be: - Relevant: useful for decision-making. - Reliable (affidabili): accurate and verifiable. - Comparable: possible to compare with other companies. - Consistent: prepared using the same methods over time. When a company prepares its annual report, it must follow some key…
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Fixed Capital: PPE+ intangible assets= 1200+145= 1345 Net Operating Working Capital: Receivables+ Inventories - Payables = 456+155-325=286 Shareholder’s equity: Capital+Reserve+Profit =100+230+154 = 484 Net financial debt: Non current debt+Bond+Current debt-Other current assets-Cash =750+380+400-305-78= 1147 Income statement reclassification: Looking at this income statement we see that it’s an income statement by nature. In the reclassifications we have aggregated the items of the income statements for highlighting something components such as: - Value Added→ shows the company’s ability to create additional value from the resources it uses in its production and transformation process (so it’s calculated as Revenues minus purchasing of everything that goes into production as raw materials, production services....) Value added + Personnel cost= EBITDA Focusing on adjustment→ Adjustments correcting the financial statement figures in order to provide a more clear representation of the performance of the company. Their purpose is to ensure that the information presented reflects the company’s real situation as accurately as possible. Adjustments may be required when unexpected events occur or when accounting principles change over time. For example, a company reports an EBITDA of €80 million, but the adjusted EBITDA is €93 million. The difference comes from excluding non-recurring costs, such as restructuring expenses. In the current year, the company carried out a restructuring, so the reported EBITDA is €80 million. However, it is important to show stakeholders that this cost does not occur every year. By adjusting for it, the EBITDA rises to €93 million, which better reflects the company’s recurring performance. All these details are disclosed in the notes to the…
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● Market Value Added (MVA): measures the difference between the market value of a company and the capital invested by its shareholders. ● Total Shareholder Return (TSR): evaluates the overall return generated for shareholders, including both capital gains and dividends. Total Shareholder Return (TSR) measures the overall return generated for a company’s shareholders over a specific period, combining both capital gains (changes in share price) and dividends distributed. TSR is often used as a benchmarking tool, allowing firms to compare their performance with that of competitors or the broader industry. Another key feature of TSR is its long-term orientation. We can use these indicators to estimate the future total shareholder return over different time horizons (such as 1, 3, 5, 10, 20, or even 30 years). The table compares how DCF methods and other valuation methods perform according to several qualitative criteria.
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Once we compute this 2 part, we are able to define the Debt initial t =Debtt-1-Capital quotett-1 and this value is also called Debt finalt-1. Example→ Interest quota2023= 9.587*4.3042%= 413 ; Capital quota2023= 1.200-413= 787 And this capital quota reduces the debt each year. In fact the following year Debt final 2023 = Debt inital2024 = Debt2023 - Capital quota2023= 9.587 - 787 = 8.800. Instead the right of use for the following year is reduced by the depreciation quota, so the “right of use initial” divided by the useful life→ in our case this value is linear =959 per year. So we obtain→ Right of use2024= 9.587- 959= 8.629 In the second year, the company still pays 1,200. Again we split it into interest quota and capital quota. Now the opening debt is 8,800, so the interest is: interest quota = 4.3042% × 8,800 ≈ 379 Since the debt is lower, the interest is lower. The capital quota becomes: capital quota = 1,200 − 379 = 821 This reduces the debt: ● opening debt: 8,800 ● closing debt (debt final): 8,800 − 821 = 7,979 The right-of-use asset is again reduced by the same annual depreciation 959 (linear method), independent from the capital quota. So over time: ● the interest quota becomes smaller (because it is calculated on a lower debt) ● the capital quota becomes bigger (so more of the 1,200 goes to repaying the debt) ● the lease liability goes to zero ● the right-of-use asset goes to zero through depreciation Moving to shorter instrument, we have already seen loan, but there are also factoring and line of credit: Factoring Factoring is a financial service, especially used in the short term, where a company sells its receivables to an intermediary, called a factor, in exchange for immediate cash. Instead of waiting 60, 90 or 120 days for the payment, the company…
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- Value-driver and dashboards→ In order to evaluate expense centres, KPIs are relevant. So we can use value drivers and dashboard to evaluate this type of centre, complementary with ABM.
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