Financial Management Module 8

Ethics

• Ethics are based on well-founded standards of right and wrong that prescribe what humans ought to do.
• There are four types of ethics:
  • Normative Ethics: establishing principles or norms that prescribe how people ought to act.
  • Metaethics: examines the nature, meaning, and justification of ethical concepts.
  • Applied Ethics: the application of ethical principles to specific areas of human behavior or societal issues.
  • Descriptive Ethics: describes and analyzes people's beliefs.

Business Ethics

• Business ethics are the moral principles, policies, and values that govern the way companies and individuals engage in business activity.
• Business Code of Ethics: a set of guidelines that ensure professional individuals and organizations conduct their business with integrity and honesty.
• Marketing Code of Ethics: being honest, fair, and respectful when selling products or services.

Globalization

• Globalization refers to the increasing interconnectedness of the world.
• International Collaboration: enables the international sharing of knowledge, skills, and best practices.
• Technological Advancements: collaboration through the global exchange of ideas, innovations, and advancements.

Trademark and Copyright

• Trademark: a recognizable insignia, phrase, word, or symbol that denotes a specific product and legally differentiates it from all other products of its kind.
• Copyright: a type of intellectual property that gives the creator of an original work, or another right-holder.

Financial Analysis

• Financial analysis: the process of evaluating the financial health and performance of a company by examining its financial statements, ratios, and other relevant data.
• Types of Financial Analysis:
  • Fundamental Analysis: evaluating the essential value.
  • Technical Analysis: analyzing historical price and volume data.
• Accounting: the process of recording, summarizing, analyzing, and reporting financial transactions of a business or organization.
• Financial terms:
  • Debit: all money expected to come into an account.
  • Credit: all money expected to come out of an account.
  • Assets: Anything of value that is owned by an individual, company, or organization.
  • Depreciation: decrease in your assets’ values over time.
  • Equity: the amount of money invested in a business by its owners.
  • Liabilities: the financial obligations or debts that a person, company, or organization owes to others.
  • Cash flow statement: a critical financial document that tracks a business's operational, financing, and investing activities.
  • Profit and loss (P&L) statement: a financial statement that summarizes the revenues, costs, and expenses.
  • Cash method: cash accounting method, only used when cash goes in and out of the business.

Venture Capital

• Types of Venture Capital:
  • Late-stage Venture Capital: applies to companies that have already shown a lot of progress.
  • Growth Capital: finances established businesses that are seeking to expand at an accelerated rate.
  • Sector-specific Venture Capital: focuses on investing in certain areas, like technology, healthcare, clean energy, or consumer goods.
  • Corporate Venture Capital: established corporations invest directly in startups.
  • Social Venture Capital: focuses on helping socially and environmentally conscious businesses.

Accelerators and Grants

• Types of Accelerator Grants:
  • Corporate Accelerators: accelerator programs run by large corporations to support.
  • University-Based Accelerators: affiliated with universities and are designed to support startups founded by students, and alumni.
  • Independent/Private Accelerators: offer support to startups in exchange for equity, fees, or other arrangements.
  • Virtual Accelerators: operate online, providing support to startups remotely.
  • Sector-Specific Accelerators: focus on startups within a particular industry or sector.
  • Impact and Social Innovation Accelerators: support startups that aim to create positive social or environmental impact alongside financial sustainability.

Raising Capital

• Raising capital is an essential aspect of starting and growing a business.
• Capital refers to the assets and money companies require to fund their standard operations and generate revenue.
• Motives for Raising Capital:
  • Debt Financing: raising capital through debt involves borrowing funds from creditors or financial institutions.
  • Purchase of Fixed Assets: capital can be raised to acquire fixed assets such as equipment, machinery, or real estate.
  • Accelerators and incubators: provide startups with resources, mentorship, and sometimes funding in exchange for equity or a fee.
  • Government funds and crowdfunding: available through grants, loans, or subsidies aimed at supporting businesses in specific industries or regions.
  • Pre-seed funding: the earliest stage of financing for startups, often provided by founders, friends, family, or angel investors.
• Venture Debt: a form of finance-raising capital that is frequently utilized by early-stage companies.
• Venture Capital: private equity and finance provided by investors to startups and small enterprises.

Globalization (continued)

• Cultural and Regulatory Differences: negotiating different legal and cultural environments.
• Dependency on Global Markets: civil engineering firms may be more vulnerable to fluctuations in global markets and economic conditions.
• Environmental Impact: globalization may be a factor in environmental degradation.
• Increased Competition: businesses competing for projects across international borders.
• Types of Globalization:
  • Political Globalization: diplomatic negotiations between nation-states.
  • Social Globalization: integration of our societies.
  • Economic Globalization: increasing interdependence of world economies.
  • Technological Globalization: spread of technology around the world.
  • Financial Globalization: ease at which money can be spread around the world.
  • Cultural Globalization: flow of information, people, cultural practices, tastes, and styles across the world.
  • Ecological Globalization: world needs to be considered one interconnected ecosystem.
  • Geographical Globalization: world is no longer seen as groups of distinct nations.