In the entrepreneurial finance class, I was exposed to basic economic principles and financial knowledge with Simon. I want to share some basic knowledge about finance based on my understanding.
In the undergraduate, I studied graphic design, so I did not study finance systematically. Through this course, I can better understand and master the knowledge of entrepreneurial finance.
The beginning of the course always feels difficult to get started, and I am not good at math, I will instinctively resist the content that needs to be calculated.
The course starts with a simple example that allows me to understand the concept of the profit and loss statement more accurately. We get basic data about CARL’S CAFE, and we need to calculate all profit and loss on his process. That means we need a profit and loss statement. The profit and loss statement can objectively record what happened over a period of time. Then I learned five levels of profit: gross profit, EBITDA, operating profit, profit before tax and profit after tax. We practiced with the profit and loss statements of Tesco and Apple.
We were also asked to calculate KPIs(KPI：Key Performance Indicator) for each part. You need to get total fixed costs, such as wages, rent, clearing, advertising, etc. and then divided by total monthly sales(excl VAT) to get the KPI indicator for that part.
In the other chapter, we learned the importance of gross profit, and the formula is
Sales – the cost of sales = gross profit
In the process of learning, I think the easiest step is to understand the concept because calculating is indeed a big challenge for me. For me, the significance of this lesson is not to train myself as a professional accountant, but to understand how a business works. It is true that business operations are not easy, and this course is only a small part of it, but it is always pleasing to obtain knowledge. After learning this basic business knowledge, we can learn more in-depth. From the profit and loss statement, we can see the financial status of many companies and whether the economy is healthy. After calculation, we can more easily dig out much key information hidden behind the report. It is also one of the basic skills an entrepreneur needs to master. That means you will find the problems more easily when profit is not good. and adjust the data of each part when you want to change the strategy. This is not simply one part.
In general, it is a combination of theoretical and applied courses based on accounting, financial management, and other related disciplines. That means you need to combine other knowledge to analyze. Based on the financial statements and related information prepared by the enterprise as the basic basis, using certain analysis methods and techniques to evaluate the financial status and operating results of the enterprise. It’s a good thing to know what’s short plate with you. Face it and change it.