IB Business Management: 
UNit 3 - Finance and Accounts

Finance and Accounts in IB Business Management is one of the five core topics and is assessed in both Paper 1 and Paper 2 SL and HL examinations. Finance is the management of money, credit, banking and investments. Accounting is the preparation of business accounts such as trading , profit and loss  and balance sheets.

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The IB Business and Management Accounts and Finance unit covers the following topics:

• 3.1 Sources of Finance
  
• 3.2 Costs and Revenue
• 3.3 Break-Even Analysis
• 3.4 Final Accounts
• 3.5 Profitability and Liquidity Ratio Analysis
• 3.6 Efficiency Ratio Analysis 
• 3.7 Cash Flow
• 3.8 Investment Appraisal
• 3.9 Budgets

IB Business Management Finance and Accounts requires lots of thinking and practice.

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Finance and Accounts

Keeping a close eye on and having effective systems to monitor inflows of revenue and outflows of expenditure is vital for any successful business. Having established sources of finances for initial business funding, cash short-falls and expansion plans is important. The accounts and finance section also provides the business with an array of tools for keeping track of cash flows, judging the viability of an investment and being able to prepare and analyse a financial records to both report on and evaluate the health of a business.

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ENRON: An introduction to accounts & finance

Before Lehman Brothers sank link a stone and heralded the start of the Great Financial Crisis, ENRON was the prime example of financial and accounting mismanagement, leading to what was then the largest corporate bankruptcy in the history of corporations.

The documentary is a fascinating introduction to the world of accounts and finance, enjoy!

The biggest ever corporate bankruptcy

FInance and Accounts

The IB Business Management course Finance and Accounts topic aims to give the student a good overview of:

• The need for finance in business and how finances can be sourced both internally and externally, from a variety of different short, medium, and long-term sources
• The different ways investments can be analysed and judged, including: pay back periods, accounting rates of return, discounted cash flows and net present value, besides other qualitative considerations
• The importance of working capital and the difference between cash and profit, examining cash flow forecasts and cash flow problems, as well as ways to to deal with liquidity problems
• Why it is important for businesses to set and monitor budgets, and examine budget variances
• Final accounts, including trading and profit and loss accounts, balance sheets, methods of calculating depreciation of assets and the different ways of valuing stock
• The different types of ratios that are available to give an indication of a firm's financial health, including: profitability, liquidity, efficiency and gearing ratios

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