Coming to terms with this new information that I had to get familiar with, was really not funny at the beginning, especially with the little information I had on what to expect as an MBA student. as a astute entrepreneur I knew I needed some form of accounting to give me a sound understanding of the concepts of accounting, and adequate mastery of cash flow to aid in the healthy assessment to of the business. Definitely I was not expecting the depth of information, language barrier and detailed exposure to accounting world that was dished out gracefully.
Initially terms like Fianacial balancing, trial balance, Finacial statement, profit and loss, cash flow structure etc. felt too new to grasp all at once, but with attention, good lecturing, hands on experience. It became easy to accept, digest, understand and then able to move freely into the final stage of proper application.
A good and fair understanding of the financial world gives a growing business an advantage, good knowledge to leverage on, influencing sound business decisions, it’s worthy to note that, sound business decisions cannot be made without proper quantitative and qualitative analysis. Business decisions, strategies without proper evaluation of the financial status of a business will definitely not end well,
Learning that not all business events qualify as an accounting event is critical. In addition to this fact is the ability to now fully recognize business event that have direct impact or can be regarded as an accounting event. understanding what category these events fall into, is inevitable for a thriving business.
Understanding transaction details includes classifying transaction details, classifying assets liabilities, stakeholders’ equity and stakeholders’ equity transaction. this interesting accounting concept helps to identify transactions with the right nomenclature and classification. Cash transaction, supplies, revenue received, cost of supply, expenses and proper expense category, accounts receivable, account payable, dividends, income, revenue etc. all are essential terms to come in torch with.
A business with good knowledge of its numbers will easily recognize the essential ratios that act as safe indicators for a thriving business, the profitability ratio happens to be one if it, this measures the ability of a company to generate income relative to revenue. liquidity ratios, guides the company in determining its ability to pay its short-term debt. We also have the gearing ratios, which is a pointer to the amount of the debt the company has when compared to its equity. Interest coverage ratio, profit or loss before tax and finance cost, this will help to determine if a company can pay its debt or not. Debt capital ratio is the total interest-bearing liabilities, total interest and total equity,
These and more factors are considered by both business owners or investors in making key decisions on whether to continue to run a business or to keep investing with possible prospects in the future.
