Fundamental concepts of business financing, cost and management accounting, and financial reporting

Abstract

The availability of solid financing can either make or break the survival chances of a business in the process of developing and launching a new product or service on the market. Financing options are plentiful but require careful consideration when deciding the optimal financial structure of businesses. For this purpose, the first part of this chapter focuses on different financial structures for business enterprises and also delves into the opportunities and challenges of each financing option. This chapter starts by distinguishing between debt and equity financing and subsequently presents traditional internal and external sources of finance. Subsequently, it also presents a wide array of contemporary financing options. This chapter then presents an analysis of costs and an understanding of basic break-even analysis. This is followed by an explanation of the main tenets for effective business budgeting. An overview of key financial terminology is then presented before delving into a presentation of the main financial reports. This chapter concludes by providing an insight into some key accounting ratios and their interpretation.