Financial Record Keeping and Analysis

Lesson Objectives

Describe ways that businesses keep track of their financial results

Distinguish between a profit and loss statement, a balance sheet, and a cash flow statement

Explain the concepts of financial analysis, financial analysis tools, and the relationships among financial measurements

Key Vocabulary Terms

Annual ReportsBalance SheetCash Flow

StatementEBITEBITDAFinancial Analysis

ToolsGross Profit Margin

Net IncomeNet Income marginProfit and Loss

Statement

Using Financial Systems and Financial Record-Keeping Tools

What would it be like to receive and spend huge amounts of money every day?

Some days you might receive much more than you spend. Other days you might spend much more than you bring in. How would you make sense of it all?

How would you make sure your bills got paid?How would you know how much money you

have or how much you have made so far this year?

Using Financial Systems and Financial Record-Keeping Tools

Keeping track of lots and lots of money may seem like a nice problem to have—but it is still a challenge

Just like wealthy individuals, businesses need to understand their finances, and the amount of money they must keep tabs on can be huge

Using Financial Systems and Financial Record-Keeping Tools

The Internal Revenue Service requires businesses to maintain financial records in order to calculate business taxes

Companies that do business internationally have currency exchange rates to deal with◦ This can become very complex very quickly.

All businesses have systems to keep track of the money they have as well as the bills they must pay

Once a company has information in a financial system, it is very easy to take that information and use it to manage the business

Introducing Business Record-Keeping and Financial Analysis

Download- Worksheet: Business Record-Keeping and Financial Analysis

Try your best to answer all of the questions

Learning about Financial Tools in Expert Groups

One group will become an expert in the following:◦Profit and loss statement◦Balance sheet◦Cash flow statement◦Earnings before interest and taxes◦Gross profit margin◦Net income margin

Learning about Financial Tools in Expert Groups

Download- Assignment: Financial Tools Matrix

Download- Reading: Financial Analysis and Record-Keeping Tools◦Each group will be required to create a

PowerPoint to explain their topic◦The audience will be required to take notes

from each of the presentations

Business Record-Keeping and Financial Analysis

Revisit worksheet: Business Record-Keeping and Financial Analysis and correct your answers with an explanation as to why the answer is correct

Cross-Curricular Integration

Research accounting and bookkeeping methods from early history to the present. (Records discovered in Babylonia date back to 3600 BCE).

Create a timeline to present your findings.

Business Letter Preparation

Eduardo Cisneros is asking for their help again

The ECPak Company is in troubleThe CFO has resigned! Mr. Cisneros would like you to write a

letter to his new management team explaining the issues the company is currently facing

Business Letter Preparation

Download- Financial Tools Business Letter◦What are the questions asking you to do?◦What questions must be answered in the letter

Business Letter

Download- Frame: Letter to ECPak Management◦Use this frame to help guide your letter writing◦Everything in the frame must be in the letter◦Have it read over by a classmate before

submitting

Sharing Letters

What is the best way to track a company’s income from month to month?

What is the best way to show investors how a company is faring financially?

Financial Record-Keeping

Imagine that you are receiving and spending huge amounts of money every day.

Some days you might receive much more than you spend.

Other days you might spend much more than you bring in.

What are some different ways that you could make sense of it all?

Financial Record-Keeping

How would you make sure your bills got paid?

How would you know how much money you have available?

How could you keep track of how much you have made so far this year?

Cross-Curricular Integration

Research Luca Pacioli, Italian mathematician and author of the first surviving accounting textbook.

He is famous for spreading the knowledge of double-entry bookkeeping.

1 page biography about Luca and then explain the usefulness of double entry accounting in at least 0.5 pages.