Business Economics 3

Finance

NHL Stenden University of Applied Sciences

Rengerslaan 8,

P. O. Box 1298

8900 CG Leeuwarden

Tel: 058 2441441

www.nhlstenden.com
Module BE 3 2018-2019

BE 3
Finance

2018-2019

Study year 2018-2019

MODULE CO-ORDINATOR:

Herman Wassens

Tel: 06-19283807

e-mail: herman.wassens@stenden.com

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Module BE 3 2018-2019

Preface

Welcome to the Business Economics 3 module: Finance!

Professionals will have to base their decisions in the work environment on thorough
investigations of the situation. These analyses may have been done by others, but
we expect you to be able to do it yourself as well! In order to be able to do that in a
solid way, you need to use the available information (in the case of this module,
financial information) in a justified manner.

While studying in this module, you will learn which sources of capital are available
to a company to be able to do the necessary investments. Therefore you need to
study the chapters of the text book and carry out the exercises on your own or in a
group of fellow students.

Of course we will support you by offering a lecture and a workshop every week.
During the lectures the theory will be explained, and during the workshops you will
get feedback on the exercises you have made.

Of course you are expected to show up prepared to the lectures as well as the
workshops. This means that you have studied the theory, done the exercises and
brought a non-programmable calculator to the lectures as well as the workshops!

We wish you lots of success in studying the material and practicing with the
exercises!

Herman Wassens & the BE team.

Leeuwarden, 29-08-2018

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Table of contents

Preface........................................................................................................................................................2
1 Introduction........................................................................................................................................4
1.1 Module rationale.........................................................................................................................5
1.2. Module objectives.......................................................................................................................6
1.3 Entrance level and prior knowledge............................................................................................6
2 Testing and assessment......................................................................................................................7
2.1 Assessment overview..................................................................................................................7
2.2 Participation................................................................................................................................7
2.3 Module resit................................................................................................................................7
3 Program...............................................................................................................................................8
3.1 Introduction.................................................................................................................................8
3.2 Overview of program...................................................................................................................8
4 Structure & organization..................................................................................................................10
5 Literature..........................................................................................................................................11

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1 Introduction

Everybody is familiar with this situation, problems or as we prefer to call them:

challenges during the course of duty. As a bachelor graduate you will have to face
lots of non-routine decisions:

“How is the financial situation of the sales department?

What about the profit margin on service X?

Will this investment be profitable?

If so, how will we finance this project? Etc.”

These, as well as other questions on Finance will be dealt with in the Business
Economics lectures and workshops, even more so, you are already acquainted with
some of these problems. However, the last question mentioned above is one that
will be of central importance during this module!

To answer this type of questions adequately, you will have to do more than “digging
in your memory” or “quickly consulting a book”.

Chances are that you will have to start calculating, based on the available
information and will have to interpret the outcomes of these calculations!

Both steps are equally important: Making the right conclusions based on the wrong
calculations can be as harmful to your company, such as drawing wrong conclusions
from the right calculations!

In this module, you will learn how to draw the right conclusions from the right
calculations in a methodical manner.

During 8 weeks you will get acquainted with a number of financial overviews. You
will learn how to construct as well how to analyze a balance sheet, income
statement (profit and loss account) and cash flow statement based on Brouwers
and Koetzier (2015).

In this 3rd BE module the emphasis is mainly on analysis of the financial health of
the company: Are we profitable (profitability)? Do we work efficiently (working
capital management)? Can we meet our financial obligations (liquidity and
solvency)? If we need money, which sources are available? (equity or debt Capital).

BE 3 is the foundation for the BE 4 module, in which you will learn how a company
will publish part of this information.

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1.1 Module rationale

The relationship with other modules and professional situations can be depicted as
follows:

The content of this module contains, amongst others, the composition of the assets
of the company, the way these assets are financed, the relationship between assets
and sources of finance, judging the financial health of a company for internal
purposes, the legal status of a company and working capital management.

These topics are relevant for your studies, since bachelor graduates need to know
and understand them in order to be able to communicate with financial experts and
advisors. This is necessary to be able to make well-founded decisions, or to propose
well-founded ideas to management.

The relationship with the professional situation described earlier is easy to see: To
decide or advise to invest in a project or not, you need to understand financial
management to be able to support your opinion!

The topics in this module are related to each other since all of them either appear
on the balance sheet or are related to this overview:

Balance sheet of …. Per …..

Assets Capital (sources of finance)

Fixed Equity Capital

Current Long term liabilities (Debt Capital)

Liquid Short term liabilities (Debt Capital)

The knowledge and skills you will acquire during this module, are very useful when
doing the BE 4 module “Financial Accounting” later during your studies.

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1.2. Module objectives

In this module you will acquire knowledge and skills in the field of financing
companies. At the end of the module, you are able to judge the financial situation
of a company and come up with recommendations to improve the way the company
is financed.

Module objectives: Business Economics 3

After completion of the module you are able to:

• Indicate which assets can be found on the debit side of the balance
sheet.
• Explain which sources of finance are used to pay for these assets and
which should be best used.
• Construct an income statement from information on sales and costs.
• Construct a cash flow statement from information on receipts and
payments.
• Analyze the three financial overviews mentioned above.
• Manage assets like stocks of goods, accounts receivable and liquid
assets in a justified manner.
• Calculate and interpret the ratios that are needed for analysis.
• Relate the financial overviews to each other and to the ratios.
• Characterize the available sources of finance and to choose between
them in a justified way in any given situation.

1.3 Entrance level and prior knowledge

To be able to successfully round of this module, it is necessary that you have done
the modules BE 1 and BE 2. Other prior knowledge is not needed.

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2 Testing and assessment

2.1 Assessment overview

To be able to assess whether you have met the requirements of this module you
will be tested at the end of the 8 weeks period. In Table 2.1 is an overview of the
test method involved, the points, deadlines and ECs.

Table 2.1 Overview of testing, points and deadlines

Maximum number Norm

Test method Norm % EC Deadline Resit
of points points

Open questions test 100 55 55 3 Week 9 Regular

2.2 Participation

To be able to successfully round off the BE 3 module, participation during the

lectures and workshops is not obligatory. But, in case you did not have any
Business Economics during your previous education, or you have experienced that
these topics are not your strengths, it will be impossible to get a good score without
being present during all lectures and workshops.

In addition to this, being present alone is not enough: You have to come fully
prepared! Just being there to “see what you can pick up” is useless!

2.3 Module resit

For those students who do not attain the norm score, the normal regulations apply.
Consult the study guide of the academy for any supplementary information on the
topic.

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Module BE 3 2018-2019

3 Program

3.1 Introduction

Analysis of the financial situation is important in any company. In bigger sized

companies it is even done on a daily basis! So you will most probably have to deal
with this as well as a bachelor graduate.

In this module you will be prepared for this by means of a two hour lecture per
week, in which the chapters will be explained, as well as during two workshops per
week.

During these hours we will stick to the following program.

3.2 Overview of program

As can be seen in the overview given below, you will be scheduled for a lecture as
well as two workshops per week on a certain topic. Your preparation for the
workshops will consist of practicing problems concerning the topic for the week.

The extended program describes which chapters you need to study to prepare for
the lectures and which assignments you have to do before coming to the
workshops.

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Table 3.1 overview of program.

MC = Multiple choice questions, E= Exercises

Week Content Topics & Exercises to prepare

1 Chapter 3 Financial statements and business plan.

Chapter 4 (only 4.2 & 4.3)
2 Chapter 3
Chapter 4 (only 4.2 & 4.3)
3 Chapter 6 (only 6.1, 6.2 & 6.3)
4 Chapter 6 (6.3 & 6.4)
Chapter 7
5 Chapter 7
6 Chapter 8 (8.3, 8.4 & 8.5)
7 Chapter 9
Chapter 10 (10.2 & 10.4)
8 Q&A lecture
Chapter 9
Chapter 10 (10.2 & 10.4)
9 Open questions test
MC 3.1 – 3.10 , 3.15 , 4.3 , 4.5 – 4.10.
Preparatory question 3.3.
E 3.3, Case 3.2.
Financial statements and business plan. Preparatory
question 4.3
E 3.1, E 4.1 & E 4.3
Inventory management and credit management.
MC 6.1 – 6.12.
E 6.1, E 6.3, E 6.5, E 6.9 & E 6.11
Cash management, and equity.
MC 6.13 – 6.15,
E 6.13 and Case 6.3
MC 7.1 – 7.4 & 7.6 – 7.10
E 7.1 & E 7.2
Equity
Preparatory question 7.2
E 7.4, E 7.6, & E 7.9
Bonds, short term liabilities and provisions.
MC 8.1, 8.2, 8.4, 8.6, 8.7, 8.9 - 8.12, 8.14 & 8.15
E 8.2, E 8.4, E 8.6, E 8.7 & E 8.9
Financial statement analysis, options, investment ratios.
MC 9.1 – 9.15, 10.1, 10.9 & 10.10.
E 9.2 & E 9.3
Revision
E 9.11 & E 10.10

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4 Structure & organization

The overview given below indicates all the student contact hours (SCU) in this
module. You have to plan your study time yourself: When will I study the material?
When will I do the exercises? It also indicates the number of hours to be spent on
self-study as well as the total of study load hours (SBU). Mind you: This is only an
indication; it is of course possible that you will spend more hours than indicated
below.

Table 4.1: Student contact hours per week

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5 Literature

Obligatory literature:

Brouwers, M.P., & Koetzier, W. (2015). Basics of financial management (3rd ed.).
Groningen/Houten: Noordhoff Uitgevers bv.
Brouwers, M.P., Koetzier, W., & Leppink, O. (2015). Basics of financial
management: Exercises (2nd ed.). Groningen/Houten: Noordhoff Uitgevers bv.

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