MSc Entrepreneurship N14T23 Entrepreneurial Finance and Accounting

1. Module Information Module code and name: N14T23 Entrepreneurial Finance and Accounting Level: Level D; 10 Credits Teaching Staff: John Parker E-mail: john.parker230@ntlworld.com Tel: 07747435225 Additional Teaching Staff: Dr. Mathew Hughes 2. Module Delivery 10 class sessions each 3 hours in length: two sessions on Monday and Tuesday and one on Wednesday for a period of two weeks; time slots are 9.30am-12.30pm and 1.30pm-4.30pm. The module runs in the two weeks commencing 29th October2012 and 12th November 2012. Please note that 5th November 9th November is a Reading Week. In total there will be 30 hours contact time, which means you need to spend an additional 70 hours engaged in independent study (to include for example group meetings, course work, reading, reflection and revision). 3. Module Content Successful entrepreneurship is dependent on the successful management of money. This involves two fundamental activities. This first is the ability to attract finance to fund entrepreneurship activities and growth, and the second is the ability to manage that finance properly. It is rarely the case that entrepreneurs will have sufficient personal funds to develop a business without resorting to external providers of finance. This module will therefore examine how entrepreneurs might finance their venture, how they should interact with investors, and the issues involved in doing so. As a precursor to this however, financiers will want evidence that an entrepreneur can effectively and successfully manage the money they might receive from an investor. Accordingly, the first part of the module examines internal

accounting procedures to demonstrate accountability to external stakeholders. 4. Module Learning Aims An entrepreneurs competence and understanding in issues of accounting and raising finance is fundamental to business planning. This module aims to provide students with (1) an understanding of basic accounting principles and analysis, (2) an understanding of the various sources of finance available to entrepreneurs, and (3) an appreciation of how to approach and manage different types of investors. 5. Module Learning Outcomes Knowledge and understanding This module develops a knowledge and understanding of: Markets - the development and operation of markets for resources, goods and services. Finance - the sources, uses and management of finance; the use of accounting and other information systems for managerial applications. Business Policy and Strategy the development of appropriate policies and strategies within a changing environment, to meet stakeholder interests. Intellectual skills This module develops: Being able to think critically and be creative: manage the creative processes in self and others; organise thoughts, analyse, synthesise and critically appraise. This includes the capability to identify assumptions, evaluate statements in terms of evidence, detect false logic or reasoning, identify implicit values, define terms adequately and generalise appropriately. Being able to solve complex problems and make decisions: establish criteria, using appropriate decision-making techniques including identifying, formulating and solving business problems; and the ability to create, identify and evaluate options; the ability to implement and review decisions Numeracy and quantitative skills including the development and use

of relevant business models Transferable (key) skills This module develops: Effective two-way communication: listening, effective oral and written communication of complex ideas and arguments, using a range of media, including the preparation of business reports. 6. Assessment 1. 50% 1.5 -hour Examination (discussion and calculation-type questions; a free choice of 2 to answer from a choice of 3 questions). 2. 50% Group Assignment (3000 words). Students are asked to form their own groups, of 4 or 5 people, and utilise publicly available information to analyse three UK listed companies. The analysis should concentrate on working capital and profitability, both of which are fundamental to a successful entrepreneur (see section 7 below). The deadline for the submission of coursework is 14th January 2013. Coursework should be handed in to the Postgraduate Office (Business School North) by depositing work into the Postgraduate Post-Box by 4pm on the deadline day. 7. Group Coursework Assignment The assignment requirements: Select three listed UK companies operating in different industrial sectors and compare and contrast working capital requirements referring to academic and practitioner literature where appropriate. Conduct an analysis of working capital management results across a span of five years for each company and provide an interpretation of the results. Discuss the different strategies that may be adopted by the chosen companies in order to achieve a balance between profitability, liquidity and risk. Your discussion should include reference to the sources of finance used and the potential availability and appropriateness of other sources. The groups response is to be presented in report format of 3,000 words in length. Note: the word count of 3,000 words is exclusive of supporting tables, graphs, calculations, appendices and a list of references. Points to observe:

 Your chosen companies may operate in any industrial sector apart from the following: (i) Banks, Financial Services and Insurance (ii) Closed end funds and investment companies (iii) Real estate When you have chosen the companies for your study, you must book these companies by sending an e-mail to John.parker230@ntlworld.com. Please give your e-mail the title N14T23 Choice of Companies and state, in the body of the message, the full names of the companies that you wish to use for this assignment. Each group should submit its choice of companies no later than 27th November 2012 Note: no two groups will be allowed to analyse any of the same three companies. Allocation of companies will be done on a first-come, first-served basis according to the date and times of e-mails sent. Do not begin detailed work on the assignment until you have received an e-mail from John, confirming that your choice of companies has been allocated to your group. Analysis of working capital is to include ratio analysis of working capital components and liquidity and include the length of the cash operating cycle (working capital cycle) for each year under investigation. Your analysis is to be for five consecutive years and must use data from a companys most recent annual report and accounts, that is, for the financial year ending 2011 or 2012. Please indicate any assumptions made in calculations and include within your report any limitations to your analysis. Groups are expected to utilise publicly available information on chosen companies such as narratives within annual reports, material on company web-sites and, if applicable, press reports. Please include copies of financial statements over the five year period for each company as an appendix to the report, and a list of references in the Harvard System of referencing at the end of the report. Date for completion The assignment must be completed and posted in the Postgraduate Post Box by 4:00pm on 14th January 2013. You should submit two copies of the assignment using the appropriate cover sheet. Appendices must include copies of the financial statements of the selected companies for the years investigated. Selection of groups

Students are required to form their own groups and to select a coordinator to act as a communicator with the module tutor, when requested, on behalf of the group. In forming your group, the following principles apply: the preferred group size is five members a group of four members is acceptable; six members is not the module tutors reserve the right to re-allocate students to groups to ensure appropriate group sizes and that all students are a member of a group.

Once a group has been formed, the group co-ordinator should advise John Parker of its membership by e-mail no later than 5:00pm on 20th November 2012. Please give your e-mail the title N14T23 Group Membership and state, in the body of the message, the full names of group members. Any student not in a group by 20th November 2012 should advise John Parker in writing. Such students will then be allocated to an appropriate group; a substantial piece of individual coursework in lieu of the group coursework assignment is not an option. Students who do not join a group of appropriate size and who do not inform John Parker of the position by 5:00pm on 20th November 2012 will receive a mark of zero for the Group Coursework Assignment. Should any changes arise in the membership of the group, then the group co-ordinator must advise John Parker of the changes in writing as soon as practicable. Any student who leaves a group and is unable to join another should also advise John Parker in writing as soon as practicable. John Parker will put such individuals into a group of a size deemed appropriate. Allocation of marks to group members Each member of a group will receive the same mark for the group coursework assignment unless representations are received in writing from all group members to the module tutors requesting an unequal mark allocation. Whilst any case for an unequal allocation of marks may be submitted with a group assignment, no case for an unequal allocation of marks from any group member can be considered once an assignment has been submitted. Group coursework assignment marks are final once they have been signed off by the External Examiner.

Notwithstanding any of the above, unforeseen situations may arise with groups and the module tutor will deal with such situations as circumstances dictate and in a manner deemed most appropriate. Summary of deadlines Submission of group membership Submission of choice of companies Submission of Group Coursework Assignment 8. Session Plan The following is a breakdown of the expected structure of sessions, although this may change. Session 1 Date Topic An introduction financial reporting to Lecturer JP Textbook reference Ch 1 5:00pm 20th November 2012 27th November 2012 4:00pm 14th January 2013

Additional references: Berman Brown, R; Saunders, M.N.K. and Beresford, R. (2006) You owe it to yourself: The financially literate manager, Accounting Forum, 30, pp179-191. 2 Preparation and presentation of the balance sheet and income statement Financial statement analysis including working capital management JP Ch 2+3+4

JP 6+5+11

Ch

Additional references: Howarth, C. and Westhead, P. (2003) The focus of working capital management in UK small firms, Management Accounting Research, 14, pp94-111. Peel, M.J. and Wilson, N. (1996) Working capital and financial management practices in the small firm sector, International Small Business Journal, 14(2), pp52-68. Peel, M.J.; Wilson, N. and Howarth, C.A. (2000) Late payment and credit management in the small firm sector: some empirical evidence, International Small Business Journal, 18(2), pp17-37. 4 Costing and pricing JP Ch 8

Additional references: Innes, J.; Mitchell, F. and Sinclair, D. (2000) Activity-based costing in the UKs largest companies: a comparison of 1994 and 1999 survey results, Management Accounting Research, 11(3), pp349-362. Drury, C. and Tayles, M. (2006) Profitability analysis in UK organizations: An exploratory study, British Accounting Review, forthcoming. 5 Venture capital private equity and MH

Bygrave, W.D. & Timmons, J.A. (1992). Venture Capital at the Crossroads, Harvard Business School Press. [Somewhat dated now with a heavy US bent but good for getting an overview of the nature and consequences of VC investing]. Cumming, D. (ed.) (2010). Venture Capital: Investment Strategies and Policies, Wiley. [A collection of articles published by key researchers in the field]. Cumming, D., Siegel, D., & Wright, M. (2007). Private Equity, Leveraged Buyouts and Governance. Journal of Corporate Finance, 13(4): 439-460. Gilligan, J. & Wright, M. (2010). Private Equity Demystified: An Explanatory Guide. ICAEW Corporate Finance Faculty. A very good overview, available on Moodle Mat Hughes. Gompers, P. & Lerner, J. (2004). The Venture Capital Cycle, MIT Press. [More of a collection of articles published by these authors in academic journals but the overview chapters (i.e. chapter 1, 2, 7 & 14) give a good summary of the VC cycle]. Jensen, M. (1989). Eclipse of the Public Corporation, Harvard Business Review, Sept/Oct. Rappaport, A. (1990). The Staying Power of the Public Corporation, Harvard Business Review, Jan/Feb. 6 7 Cost-volume-profit analysis JP Ch 7

Budgeting including cash JP Ch 9 management Additional references: Hansen, C.H; Van der Stede, W.A. (2004) Multiple facets of budgeting: an exploratory analysis, Management Accounting Research,15, pp415-439. Hope, J. and Fraser, R. (2003), Who needs budgets? Harvard

Business Review, February 2003, pp108-115. Libby, T. and Lindsay, R.M. (2003) Budgeting an unnecessary evil: how the BBRT envisions a world without traditional budgeting, CMA Management, April 2003, pp28-31. 8 Introduction to finance, and time value of money JP Ch 10

Additional references: Chapters 1 and 4 in McLaney, E. (2006) Business Finance Theory and Practice, FT Prentice Hall: Essex, England. 9 Investment appraisal JP Ch 10

Additional references: Chapter 4 in McLaney, E. (2006) Business Finance Theory and Practice, FT Prentice Hall: Essex, England. Shank, J.K. (1996) Analysing technology investments - from NPV to strategic cost management, Management Accounting Research, 7, pp185-197. 10 Finance from a MH stakeholder perspective: Key tasks in building persuasiveness Kawasaki, G. (2004), The Art of the Start. Penguin Group. Chapter 5, 7. 9. Core Text Atrill, P. and McLaney, E. (2006) Accounting and Finance for NonSpecialists, FT Prentice-Hall: Essex.