LEARNING OUTCOMES

Students attending the class will acquire basic knowledge of the firm, the operating cycle, and the measurement of the outcomes of operations and results, with an emphasis on the preparation of financial statements.

AIMS AND LEARNING OUTCOMES

The objective of the course is to equip students with basic knowledge on the firm, its functioning mechanisms, and the skills to measure and interpret its results. The first part of the course deals with the aim of a company and the characteristics of the environment surrounding the company. Then, the issues related to the represetation of a company's operations and the measurement of its results will be introduced. In the present economic context, measuring and correctly interpreting a company's results is a fundamental tool for managers, as well as other stakeholders.

Hence, financial statements play a fundamnetal role in providing stakeholders with information on a company's financial position and performance. Understanding the objectives and the criteria at the basis of the preparation of financial statements allows those subjects to examine a company's health.

To this end, the course will illustrate how the most important operations of a company are measured in order to build financial statements.

PREREQUISITES

None.

TEACHING METHODS

The course features classes and tutorials. Classes introduce the main topics of the course. Tutorials aim to offer students the opportunity to apply notions acquired during the classes.

SYLLABUS/CONTENT

The main contents of the course are the following:

The firm and its environment. A company is a complex entity that operates in order to produce and sell goods or deliver services with the aim to satisfy different needs. In order to understand how a company works, the essential traits of the company, the different firm typologies, and the relationships between the firm and the environment.

The capitals. To run its activities, a firm needs some inputs. The most important capitals a firm uses in its operations will be examined. Those capitals, which are controlled by an entity and will bring future benefits to that entity, are its assets. In order to acquire those assets, an entity needs funds. A company can be funded either by shareholders or by other funders. The characteristics of shareholder equity and of liabilities related to other funding sources will be examined.

The operating cycle. The analysis of the operating cycle allows to understand how a company produces and sells goods or delivers services. The phases of the operating cycle are financing activiries, acquisition of the necessary inputs, the transformation of those inputs, and selling the final product or delivering the service. Those operations produce diffrent economic and monetary effetcs, which will be analyzed.

Income. A company's operations can generate or destroy economic whealth. Income represents the net worth generate by a firm. In order to determine net income, some rules should be applied. In particular, the course will discuss the accrual accounting principle.

Finacial statements. Financial statements offer information about a company's financial position and performance. The course wil discuss and illustarte the principles underlying the drawing of financial statements. The different statements will be introduced, as well as their linkages with assets, liabilities, equity, and income.

Profitability, earnings quality, and solvency. In order to survive, a company should meet some equilibrium conditions, which are related to profitability and solvency. Regarding profitability, a company should be profitable, and its profits should be alble to adequately remmunerate shareholder investment and expectations. However, when analysing profitability, attention should be devoted to the activities that have contributed most to profit generaton. Solvency analysis is concerned with understaing whether and how a company is able to timely meet its obligations.

RECOMMENDED READING/BIBLIOGRAPHY

• F. Giunta (2018), Economia Aziendale, Wolters Kluwer, ISBN: 978-88-13-36518-9 (capitoli 1, 2, 3.1, 3.2, 3.3, 4, 5, 6, 7, 8).
• A. Quagli (2018), Bilancio d’esercizio e principi contabili, Giappichelli, ISBN: 978-88-92-11777-8 (capitoli 1 e 2).