Week 3: The role of finance in business – Part 1
“Overview … Financial Statements – An Overview … Financial Statements – What do they mean? … Financial Statements – Who are the End Users? … Financial Statements – A Discussion Question … Sources of Business Financing – An Overview … Sources of Business Financing – An Exercise … Sources of Business Financing – Crowdfunding … Sources of Business Financing – A Discussion Question”
- Week 3 - Role of Finance in Business - Part 1 > Week 3 Overview > Week 3 Overview
- Week 3 - Role of Finance in Business - Part 1 > Financial Statements - Who are the End Users? > End Users
- Week 3 - Role of Finance in Business - Part 1 > Sources of Business Financing - An Overview > Overview of Business Financing
- Week 3 - Role of Finance in Business - Part 1 > Sources of Business Financing - Crowdfunding > Crowdfunding
Week 3 – Role of Finance in Business – Part 1 > Week 3 Overview > Week 3 Overview
- We’ll start by looking at financial statements and then move on to look at sources of business finance – both traditional and non-traditional.
- To start off this week, we’ll do a reading and an interactive exercise focused on financial statements.
- You may find some things that surprise you and you have a chance to share some of theses surprises with your MOOCmates on this week’s discussion board.
- Week three is the only week in which we cover two course objectives.
- Never heard of crowdfunding before? You have the opportunity to explore various crowdfunding website and share your thoughts with your MOOCmates on the second discussion for the week.
- As always, we will wrap up the week with a brief 10 question quiz on the week’s content.
- Next week is our final week of the MOOC and it’s sure to be a great one.
Week 3 – Role of Finance in Business – Part 1 > Financial Statements – Who are the End Users? > End Users
- The object of financial statements i s to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.
- Managers require financial statements to manage the affairs the company by setting its financial performance and position and use them in making important business decisions.
- Shareholders use financial statements to assess the risk and return on their investment in the company and make investment decisions based on their analysis.
- Financial institutions assess the financial health of a business to determine the probability of a bad loan.
- Suppliers need financial statements to assess the creditworthiness to the business and determine whether to supply goods on credit.
- Employees use financial statements for assessing the company’s profitability and the effects that may have on future pay and job security.
- Now that you’ve have an understanding of who uses financial statements, you have the opportunity to explore them on the Securities Exchange Commission website and discuss your finding with your MOOCmates on this week’s discussion board.
Week 3 – Role of Finance in Business – Part 1 > Sources of Business Financing – An Overview > Overview of Business Financing
- Equity funding equates to a loss of some ownership control but you may gain a mentor or someone who has been through the new business route and is willing to give you a hand.
- The investors give you money but on some level they’re allowed to be involved in the company decision-making and operations.
- Typically Angel Investors invest earlier in the business life cycle and contribute less money than Venture Capitalist or VC’s. The type of financing company seeks is dependent on where the company is in the business life cycle.
- The stages run from the concept stage, where an entrepreneur gets a new idea to the decline stage, where the company had seen all this growth and success and is now declining due to changing technology, time, or poor management.
- Funding in the concept stage generally comes from the founder family friends partners and other types of smaller personal loans.
- As businesses go throughout their life cycle, they tend to need more money from larger investors and they tend to be more reliant on mentors and other people for help.
- Therefore they may be inclined to seek funding from Angel Investors or outside Venture Capitalists who can help them not only with the financial pieces, but also offer input and guidance in the creation and operation of a new business.
Week 3 – Role of Finance in Business – Part 1 > Sources of Business Financing – Crowdfunding > Crowdfunding
- So crowdfunding is when you raise lots of small sums of money from lots of people over the Internet.
- It’s really filling a gap in the market for all kinds of entrepreneurs and small businesses and creative artists that aren’t able to get capital in other ways.
- Crowd money now represent over two billion dollars in small increments of funding to small businesses in the US. It’s really great for people who have a compelling story to tell that will get people excited and interested in following them.