SHOULD I INVEST OR NOT

As an individual with no background knowledge in Accounting, I was wondering how am going to cope with doing courses that I had never come across in my years of studies. Beginning from my secondary years to my postgraduate diploma and now my MBA programme. The fear of what to expect especially at this stage of my life nearly discouraged me. Even the first introduction from the lecturer, when he gave a brief introduction of himself and wrote “Please enjoy yourself and learn at the same time” I still wasn’t convinced.  I felt it was one of the first impressions the preschool teachers normally give to the kids on their first arrival at school. However, as the classes commenced, and the approach of the lecturer in breaking the courses to my level, making it an interactive & engaging session, really lifted my spirit and I told myself this is achievable.

Before now, I was sceptical about why I needed to learn Accounting. However, attending the brush-up classes at LBS helped me understand that knowledge of accounting will assist me in getting information and making financial decisions. Also, as a manager or shareholder of an organization or company, knowledge of Accounting Information systems (AIS) which is a subset of Enterprise Information systems (EIS) will help me make informed financial and operational decisions.

The lecturer thought us that the main target of Corporate Financial Accounting (CFA) is the investor. Though, that is not the only target. The key users of Corporate financial accounting information are the investors. The nature of the decision an investor makes is; should I invest or not? In answering the question of whether I should invest, the rational investor looks at the return (profitability), risk, and time. The investor gets their information from the company’s Annual reports & accounts, Financial Statements, and major Accounts (account types). The investor looks at the financial statement to know if a company or enterprise will be able to provide the kind of return and profit, they need.

The five major financial statements the investor looks at before deciding include: First, the Statement of financial positions which shows the resources of an organization and the sources of these resources at a point in time. Their constituents are Assets, liability, and equity. Secondly, is the Statement of Profit & Loss which equals revenue minus expense. Thirdly, is the Statement of Changes in Equity which defines how equity has grown from the beginning of the year to the end. Fourth, is the Statement of cash flow which looks at cash flow from inflow vs outflow perspectives, and activity levels. Lastly are Notes to the accounts which provide more explanation on the financial statement or items obtained.

Based on the knowledge I have gained these few weeks; I can say Accounting is a very interesting course and I now look forward to attending more of the classes.

#MMBA3