BST 9502 Advanced Managerial Accounting and Real Investment Theory
BST 9502 Advanced Managerial Accounting and Real Investment Theory
The course is analytically oriented and develops the participants skills to take decisions according to the partner's interest. The purpose of the interplay between economic theory, economic models and data from the market and the accounting system, is to ensure that the students gets the necessary knowledge to be strong- minded persons regarding problems of business management. The specialisation is practically oriented, and the intention is to make sure that the student is familiar with the most common economic problems, from both the private sector and public sector. The specialisation intends to give the participants a background that will enable them, after acquiring the necessary knowledge of the relevant trade, to become business partners
After taking the course, the students should be able to explain key concepts and give an account of the tools of analyses of business economic problems (these tools include methods, techniques, theories, etc. applied in the subject area).
Examples:
- How business management reports should be developed.
- Decision-making, both in the short and the long term.
- Achieve an understanding for the evolution of modern business economics, which will make the students suitable for master studies.
- Achieve an understanding for different sides of business management, and the relations between subjects such as strategy, finance and accounting.
After taking the course, the students shall:
- Be able to see the relations between goal, problem description, data quality, method and the consequences for the decision-making.
- The students shall realise that the final decision recommendation is a consequence of a range of assumptions and choices, made during the reporting process. "Everything depends on something".
Examples:
- The reliability of a recommendation depends on both data quality and the method that has been chosen.
- Decisions may imply new behaviour that should be taken into account during the decision-making process.
After taking the course, the students shall
- Be able to understand that doing the best in the interest of one party often will bring a poorer solution for another party. Using business management models will neither ensure justice or maximize the involved persons as a group.
- The students should understand the importance of being able to compare the different advantages and disadvantages of alternatives, analyse them and make conclusions.
- In addition, the students should realise that despite the problem related to measuring the firm's output (quality and productivity) in one sense, it is important to try to figure out some objective goals. Afterwards, it is the individual employee's responsibility to try to get as good results as possible from the resources she or he has at her/his disposal. Is it possible to maintain or improve output, measured both in terms quality and productivity, with less expenses?
Business Economic consist of four topics:
- Cost analysis
- Incentive contracts modelling
- Linear programming
- Multi-period business financial assessments
- General development of participants' knowledge related to the use of the net present value method, for example "timing problems"
- Valuation
- Practical use of resale value, the value of flexibility
- About the relationship between “accretive economy” (Sustainability) and business optimization.
Module 1: Cost analysis
Cost analysis addresses various aspects of resource management, including issues related to determining optimal resource allocation, optimal resource flow and how to motivate the company's employees to work with resource management. Central to the course is to give the participants an understanding that "numbers are alive" and that the cost figures that must be used as the basis for a decision, decision-relevant costs, must be tailored in each case, depending on the purpose of the decision. Theory and methods that enable participants to calculate decision-relevant costs for decisions related to products, customers, efficiency and competitive exposure are emphasized.
- Introduction to cost analysis
- Cost Management
- Activity analysis, internal and external perspective
- Activity-based cost analysis and activity-based management, capacity management issues, driver selection
- Profitability analysis and the need for tailoring depending on purpose and cost object, including customer profitability and preparation of the Stobachoff curve.
- Treatment of joint costs
- Lifecycle Costs
- Time-driven activity-based cost understanding (TD-ABC)
- Lean Costing
- Relevant articles related to:
- Stall points
- Management systems
- Shared Services
- Lean Costing
- Time Driven Activity Based Costing
Topic 2: Incentive contracts modelling
The students shall understand a simple principal agent model, the advantages and disadvantages, and be able to analyse and develop incentive contracts in practice. The students shall know the essential results from international studies.
- Introduction to Incentive contracts modelling
- A framework for incentive modelling, a simple Principal - Agent model with a risk neutral agent
- Motivation and behavioural economics
- Screening
- Formal models in incentive contracts
- Executive contracts and bonus plans
- Incentives in team
- Options
- Empirical studies: How effective are economics incentives?
Topic 3: Linear programming
The students shall understand the need for Linear Programming (LP), for instance in connection with staff allocations, capital rationalisation, production planning and deciding the product mix. They shall also be able to formulate different business problems, use the solver function in Excel, interpret data and reflect on the Excel solution, and finally, outline improving amendments.
- Introduction to LP:
- Structuring LP-problems
- LP as a method improve activity analyses, iterative budgeting and capital rationalisation problems.
- Slack variables, shadow prices, decision variables, base solutions, variables in and outside base solutions, other LP notions.
- Fundamental understanding of the Simplex algorithm function.
- Transformation of the constraints to a specific problem, to be able to evaluate whether the solution is optimal or amendments should be taken into concern.
- Different solution presentation; graphic, analytical, Excel and the connections between those presentation formats.
Topic 4: Multi period firm valuation and project valuation
Multi-periodic valuation deals with business economic analysis of various real investment challenges as well as financial valuation of all, or part of, businesses.
The course will cover:
- General development of participants' knowledge related to the use of the net present value method, including the use of
- Value creation model
- "Timing"
- Project Score Card and application of net present value index
- Valuation with emphasis on fundamental analysis and issues related to the determination of return requirements (risk discussions) cash flow forecasts.
- Practical Reaction Option Theory, the value of flexibility. The calculation of the value of correction opportunities during project execution, under different risk assumptions, is emphasized, for example the use of «risk neutral method».
- "Accretive economy", about the links between environmental economics and business logic.
The course has 90 hours of lectures in the autumn term, including 10 hours of assignment reviews.
Two years of college education in economics and business administration, marketing or equivalent is required for taking the course.
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
- MET 2910 Mathematics
- MET 2920 Statistics for Economists
- BØK 3411 Finance and Managerial Accounting I and BØK 3421 Finance and Managerial Accounting II
- or BØK 3422 Managerial Accounting and BØK 3423 Finance
- BØK 3531 Financial Accounting and Financial Statement Analysis
- or BØK 3532 Financial Accounting and Financial Statement Analysis
- or FIN 3512 Corporate Finance
- SØK 3520 Microeconomics
Optionally equivalent knowledge from other educational institutions.
| Assessments |
|---|
Exam category: Submission Form of assessment: Written submission Weight: 100 Grouping: Individual Duration: 5 Hour(s) Comment: Home exam 5 hours. Exam code: BST95021 Grading scale: ECTS Resit: Examination when next scheduled course |
| Activity | Duration | Comment |
|---|---|---|
Teaching | 80 Hour(s) | |
Feedback activities and counselling | 10 Hour(s) | Review of assignments in plenary. |
Student's own work with learning resources | 220 Hour(s) | |
Group work / Assignments | 85 Hour(s) | |
Examination | 5 Hour(s) |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 15 ECTS credit corresponds to a workload of at least 400 hours.