Data Analytics and Data Visualization

New technologies are changing the landscape of accounting and financial reporting. Companies are increasingly using data analytics and visualization (charts, pictures, and graphs) to more effectively convey financial information. To familiarize students with data visualization, each module opens with a data dashboard and uses real-world data analytics and applications for student learning. Each module contains Data Analytics Insight boxes that describe how data analytics applies to the topics. Analytics and visualizations are reinforced with assignments in each module that present data graphically and require students to analyze and interpret the data visualizations. Data analytics questions are exclusively available on myBusinessCourse. We provide students with online access to author-created PowerBI dashboards where they can interact with the data and learn how to create their own data visualizations. We have partnered with Calcbench, a leading provider of data extracted from SEC filings. Calcbench data underlies each of the Data Analytics Insights and all of the end-of-module data analytics assignments. This allows instructors and students to work with actual and interesting financial statement data. These discussions and assignments are identified by the data analytics icon in the margin.

Welcome to Financial & Managerial Accounting for MBAs

Welcome to the Seventh Edition of Financial & Managerial Accounting for MBAs. Our main goal in writing this book was to satisfy the needs of today’s business manager by creating a contemporary, engaging, and user‑oriented textbook. This book is the product of extensive market research including focus groups, market surveys, class tests, manuscript reviews, and interviews with faculty from around the world. We are grateful to students and faculty who provided us with useful feedback during the preparation of this book.

Target Audience

Financial & Managerial Accounting for MBAs is intended for use in full‑time, part‑time, executive, and evening MBA programs that include a combined financial and managerial accounting course as part of the curriculum, and one in which managerial decision making and analysis are emphasized. This book easily accommodates mini‑courses lasting several days as well as extended courses lasting a full semester.

Innovative Approach

Financial & Managerial Accounting for MBAs is managerially oriented and focuses on the most salient aspects of accounting. It teaches MBA students how to read, analyze, and interpret financial accounting data to make informed business decisions. This text makes accounting engaging, relevant, and contemporary. To that end, it consistently incorporates real company data, both in the body of each module and throughout assignment material.

Flexible Structure

The MBA curricula, instructor preferences, and course lengths vary across colleges. Accordingly and to the extent possible, the 25 modules that make up Financial & Managerial Accounting for MBAs were designed independently of one another. This modular presentation enables each college and instructor to “customize” the book to best fit the needs of their students. Our introduction and discussion of financial statements constitute Modules 1, 2, and 3. Module 4 presents the analysis of financial statements with an emphasis on profitability analysis. Modules 5 through 10 highlight major financial accounting topics including assets, liabilities, equity, and off-balance-sheet financing. Module 11 details the process for preparing and analyzing the statement of cash flow. Module 12 explains forecasting financial statements and Module 13 introduces simple valuation models. At the end of each financial accounting module (Modules 1 through 13), we present an ongoing analysis project that can be used as a guide for an independent project. Like the rest of the book, the project is independent across the various modules. Module 14 introduces managerial accounting and is followed by a discussion of cost behavior and cost estimation in Module 15. Module 16 explains cost-volume-profit analysis while Module 17 focuses on using relevant costs to make business decisions. Job and process costing are covered in a single module, Module 18, followed by activity-based costing in Module 19 and the assignment of indirect costs in Module 20. The remaining modules, 21 through 25, highlight managerial accounting topics ranging from operational budget and variance analysis to segment reporting, product pricing, and capital budgeting. At the end of the book, we include several useful resources. Appendix A contains compound interest tables and formulas. Appendix B is a chart of accounts used in the book. Appendix C is an Ongoing Analysis Project based on two companies, Parker Hannifin (PH) and Illinois Tool Works (ITW). Each financial accounting module includes quantitative and qualitative questions that guide students through a company analysis.

Managerial Emphasis

As MBA instructors, we recognize that the core MBA accounting course is not directed toward accounting majors. Financial & Managerial Accounting for MBAs embraces this reality. This book highlights reporting, analysis, interpretation, and decision making. In the financial accounting modules, we incorporate the following financial statement effects template when relevant to train MBA students in understanding the economic ramifications of transactions and their impact on all key financial statements. This analytical tool is a great resource for MBA students in learning accounting and applying it to their future courses and careers. Each transaction is identified in the "Transaction" column. Then, the dollar amounts (positive or negative) of the financial statement effects are recorded in the appropriate balance sheet or income statement columns. The template also reflects the statement of cash flow effect (via the cash column) and the statement of stockholders' equity effects (via the contributed capital and earned capital columns). The earned capital account is immediately updated to reflect any income or loss arising from each transaction (denoted by the arrow line from net income to earned capital). This template is instructive as it reveals the financial impacts fo transactions, and it provides insights into the effects of accounting choices.

Innovative Pedagogy

Focus Companies for Each Module

In the financial accounting portion of the book, each module’s content is explained through the accounting and reporting activities of real companies. To that end, each module incorporates a “focus company” for special emphasis and demonstration. The enhanced instructional value of focus companies comes from the way they engage MBA students in real analysis and interpretation. Focus companies were selected based on the industries that MBA students typically enter upon graduation. We apply a similar approach to the managerial accounting modules, but limited access to internal accounting information prevents us from illustrating all managerial accounting topics using real company data. We do, however, incorporate real-world examples throughout each module. Each managerial accounting module is presented in context using real-world scenarios from a variety of service, retail, and manufacturing companies. The following table lists focus companies by module.

Real Company Data Throughout

Market research and reviewer feedback tell us that one of instructors’ greatest frustrations with other MBA textbooks is their lack of real company data. We have gone to great lengths to incorporate real company data throughout each module to reinforce important concepts and engage MBA students. We engage nonaccounting MBA students specializing in finance, marketing, management, real estate, operations, and so forth, with companies and scenarios that are relevant to them. For representative examples, SEE PAGES 2-6; 4-18, 19 & 23; 5-3 & 14; 6-10, 22, 23 & 29; 7-6 & 13; 8-6, 7 & 8; 9-6 & 14; 10-4, 11, 15 & 24; 11-5; and 13-13 & 27.

Reviews & Videos for Each Learning Objective

Accounting can be challenging—especially for MBA students lacking business experience or previous exposure to business courses. To reinforce concepts presented in each module and to ensure student comprehension, we include reviews that require students to recall and apply the accounting techniques and concepts described in each module. Each Review is accompanied by an author-created video that walks students through the problem and emphasizes problem-solving techniques that students should consider. These Guided Example videos are accessed through myBusinessCourse.

Excellent, Class-Tested Assignment Materials

Excellent assignment material is a must‑have component of any successful book (and class). In keeping with the rest of the book, we used real company data extensively. We also ensured that assignments reflect our belief that MBA students should be trained in analyzing accounting information to make business decisions, as opposed to working on mechanical bookkeeping tasks. Assignments encourage students to analyze accounting information, interpret it, and apply the knowledge gained to a business decision.

Fundamentals of Financial Accounting Tutorial

This interactive tutorial is intended for use in programs that either require or would like to offer a pre-term tutorial that creates a baseline of accounting knowledge for students with little to no prior exposure to financial accounting. Initially developed as a pre-term tutorial for first-year MBA students, this product can be used as a warm-up for any introductory-level financial accounting course. It is designed as an asynchronous, interactive, self-paced experience for students

Available Learning Modules (You Select)

1.   Introducing Financial Accounting (approximate completion time 2 hours)
2.   Constructing Financial Statements (approximate completion time 4 hours)
3.   Adjusting Entries and Completing the Accounting Cycle (approximate completion time 4 hours)
4.   Reporting and Analyzing Cash Flows (approximate completion time 3.5 hours)
5.   Analyzing and Interpreting Financial Statements (approximate completion time 3.5 hours)
6.   Excel and Time-Value of Money Basics (approximate completion time 2 hours)

This is a separate, saleable item. Contact your sales representative to receive more information or email customerservice@cambridgepub.com.

New Edition Changes

Based on classroom use and reviewer feedback, a number of substantive changes have been made in this edition to further enhance the MBA students’ experiences.

Data Analytics & Excel Skill Development for Career Readiness

The basics of accounting haven't changed much in hundreds of years, but businesses have experienced significant change in the past decade due to the increased use of new technologies ranging from data analytics and Blockchain to machine learning and artificial intelligence. Technology is rapidly altering how accounting is performed and what can be done with the data once they are collected. In response to the changing demands of the business world, the AACSB has incorporated data analytics requirements within its educational framework. More recently, the AICPA and NASBA have underscored the importance of data analytics by making it a significant element in the CPA Evolution Model Curriculum. The consensus suggests that today's business students need an understanding and working knowledge of data analytics and data visualization to compete for the best jobs. In addition, employers expect prospective employees to be proficient with Excel.

In recognition of the increasing importance of data analytics and the need for Excel proficiency, the Seventh Edition includes several new features to enhance students' career readiness.

• In many modules, we use data visualizations to depict financial information. It is important for students to become comfortable interpreting visual depictions of data.
  
  
  
• Each module includes assignments that require students to use Excel and Tableau to hone data analysis and data visualization skills.
  
  
  
• Appendix D, at the end of the book, provides an overview of data analytics, data visualization, and best practices for the effective display of data.
  
  

Financial Accounting Modules (1-13)

• Digital delivery enhanced:  To serve the expanding delivery modes of MBA education, we updated and expanded our in‑module Reviews and Guided Example videos for all modules (each Learning Objective has a Review/Guided Example, as well as a corresponding eLecture). In addition, all objective assignments are available in MBC.
  

• Updated and expanded data visualization and analytics:  Data analytics questions have been updated and expanded in each module to show their usage in financial statement analysis. Author-prepared videos demonstrate how to complete the data visualizations and analytics assignments.

• New Data Analytics Insights:  Each module includes new Data Analytics Insights that provide examples of how financial statement data can be analyzed and visualized to uncover trends and address important questions. Also, a new Appendix D entitled, "Data Analytics & Visualizations" provides an overview to create a baseline of knowledge.
  

• New analysis project:  Each module concludes with a hands-on analysis project set in MBC. Students are led through an analysis of two competitors: Parker Hannifin (ticker: PH) and Illinois Tool Works (ticker: ITW). Students apply the tools they learn in each module to complete a comprehensive financial statement analysis and valuation project.

• Integration of Calcbench data:  We have partnered with Calcbench, a leading provider of data extracted from SEC filings. Calcbench data underlies most of the data visualization graphics presented in each module and many of the end-of-chapter data analytics assignments. This allows readers to work with actual and interesting financial statement data.

• ESG reporting:  We include relevant discussions of ESG reporting and analysis whenever appropriate.

• Enhancements to MBC:  Assignments in MBC are updated to reflect new technology and reduce rounding issues. Downloadable Excel spreadsheets have been developed for many assignments. Solutions to algorithmic assignments have been added to this edition.
  

• Credit analysis:  There is expanded content related to credit analysis included in Module 7 where we discuss common goals of credit analysis and the critical facets of this process. We adopt the term "capital structure analysis" instead of "solvency analysis" in light of its growing popularity to emphasize the importance of looking at all facets of a company's capital structure when conducting credit analysis.
  

• EBITDA:  EBITDA is a term commonly used in practice. This important measure is introduced in several places and explains how it relates to net income and other income statement measures. This includes discussion of the pros and cons of using EBITDA and its variations.

• Analyzing intangible assets:  New content in Module 6 discusses a wide variety of intangible assets including goodwill. The section discusses valuation methods, capitalization, and the subsequent accounting for intangibles. This includes explanation of the impairment of intangible assets and how to forecast intangibles.

• Treasury Stock:  In light of the marked increase in the frequency and size of stock repurchases and retirements, this edition includes an expanded discussion of this activity and demonstrates the financial statement impact of retiring stock and its interpretation.

• Acquired Research and Development expense:  We include a discussion of the origin and interpretation of acquired R&D expenses for financial statement analysis.
  

• Earnings Quality:  We expand discussion of earnings quality to include a detailed look at the relations among net income, accruals, and cash flows, along with academic research on these subjects.

• Financial Statement implications of current events:  We discuss important market implications to financial statement analysis such as the collapse of Silicon Valley Bank and its connection to debt investments, the effect of unused office space in the wake of the shift to work-from-home on lease arrangements, and other current events.
  

• Multiple Choice questions:  Each module contains a new set of multiple-choice questions for readers to quickly check on their understanding of key concepts and tools for each module.
  
  

Managerial Accounting Modules (14-25)

• Expanded coverage, resources, and assignments related to data analytics and Excel skill development in an effort to enhance career readiness.

• Emphasized critical thinking required in managerial decision-making through new questions inserted within, and directly related to, the module content. The authors emphasized questions where there is more than one viable answer to a problem, signaling that there are often no single, correct answers.

• Highlighted ESG implications of each module's topics in a variety of ways including new text discussions, critical thinking questions, and end-of-module assignments—all marked with an ESG icon.

• Made any necessary adjustments to learning objectives to ensure each learning objective represents a standalone learning unit.

• Streamlined, revamped, and rearranged module content to improve the chapter flow.

• Revised, enhanced, and added new module exhibits and graphics.

• Updated modules with new relevant examples.

• Added many new end-of-module assignments (over 80 new assignments in total).

• Added new assignments to ensure adequate coverage per learning objective
• Expanded ethics-related assignments and identified all ethical questions with a unique icon
• Added CMA-adapted questions, all identified with a unique icon
• Added new Excel data analysis assignments in each module
• Referenced a new set of assignments that require students to analyze existing data visualizations.

SUPPLEMENT PACKAGE

For Instructors

• myBusinessCourse:  A web-based learning and assessment program intended to complement your textbook and classroom instruction. This easy-to-use course management system grades homework automatically and provides students with additional help when you are not available. In addition, detailed diagnostic tools assess class and individual performance. myBusinessCourse is ideal for online courses or traditional face-to-face courses for which you want to offer students more resources to succeed. Assignments with the MBC Homework icon in the margin are available in myBusinessCourse. eLecture videos are available for the module Learning Objectives, and Guided Examples for the in-module Reviews are available for you to assign students.
  
• Solutions Manual:  Created by the authors, the Solutions Manual contains complete solutions to all the assignments.
• PowerPoint:  Created by the authors, the PowerPoint slides outline key elements of each module.
• Test Bank:  Written by the authors, the test bank includes a variety of question types.