Basic Accounting and Financial
Management for Sports Organisations.
Ch.1 Introduction to The Study of This Module:
The subject of sports finance can be defined as the study of the effective
management of cash flows by sports organisations in pursuit of their
organisational objectives.
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Four key aspects of the subject.
It’s a management subject concerned with the effective operation of
sports organisations.
The focus on effective management.
The study of cash flows in sports organisations.
Deals with financial management in all types of sports organisations.
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
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1.
2.
3.
4.
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1.
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4.
5.
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The financial structure of all sports organisations.
Capital employed
Assets
Operating cash flow
Return to capital employed
The overall cash flow of a sports organisations
Operating activities
Non-operating investments
Financing
Investment
Taxation
Services of finance
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
Value in sports organisations
The fundamental objective of a sports organisation is to maximise organisation
value
-include both profit-seeking sports business & not-for-profit sports organisation.
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3 roles for accounting within a sports organisation
1.
Identifying the key financial information
2.
Measuring financial values
3.
Communicating financial information
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Benefits of Accounting
1.
Know the performance of the business in a time period
2.
Know the status of the business firm
3.
Able to assist management to analyse and decide logically by using
accounting
4.
Use accounting to calculate tax
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
3 broad types of accounting information
1. Financial accounting
2. Managerial accounting
3. Tax accounting
Accounting
Accounting is simply the means by which we measure and describe the
results of economic activities (R.F. Meigs, et. Al.,1995)
The record of business activities in a systematic way so that management
can use accounting to make a business decision (ขนิษฐา ชีวพัฒนพันธุ์, 2001)
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In the other word, it’s called ‘ Language of business’
Account System operates this way……………….
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
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The purpose of accounting
the basic purpose of accounting is to provide decision makers with
information useful in making economic decisions.
Financial accounting
-is determined with the recording and reporting of financial transactions
for external needs (J. Becch & S. Chadwick, 2004)
Managerial accounting
-involves the provision of financial information for internal planning and
decision-making
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
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Questions before starting a business ( รวีวรรณ นิพนั ธ์ประศาสน์, 2547)
1.
What type of business is it?
Land, Buildings, Machines, Other equipment needed?
How much money needed?
Management plan? Long-term investment
Factors affecting decision-making such as size, timing and risk of cash flow in the
future.
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It’s called ‘Capital Budgeting Decision’
Source of Fund?
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Where to find?
Long-term debt (Bank loan, etc..) or Owner’s equity. What is the appropriate ratio between
D/E as it affects risk of business. The sport organisation should choose the lower cost
of capital and find many sources of fund.
Financial Leverage = company use debts as source of funds for assets
Company with high debt is ……..
Helps share holders and higher return for them!
2.
This is called ‘Capital Structure Decision’
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
3.
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How to manage working capital and cash?
Working Capital = Current Assets = Cash, Account receivable,
inventory and so on…
Working capital management needs to be done daily to make sure the
sport company has enough liquidity/cash to pay its creditors.
How much cash needed for daily activities?
Amount of inventory
Source of fund for inventory
Good manager find the right mach for the above!!
It’s called ‘Working Capital Decision’
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
What is financial management?
A.J. Keown, et.al.2000, suggest that it is a creation of economic value and
wealth of organisation by doing 3 activities above emphasising on
business decision-making to create maximum wealth of company.
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Business Structure
1.
Sole proprietorship
2.
Partnership
General and limited
3.
Limited company
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Why limited company is so popular?
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK
Basic Accounting and Financial
Management for Sports Organisations.
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Vital decision-making in Finance
1.
Investment decision (Most important)
Use of fund
Financing decision
Source of fund
Dividend decision
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Roles and functions of financial management
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2.
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Responsibility to share holders
Responsibility to employees
Responsibility to creditors
Responsibility to government
Responsibility to society
Roles
Find source of fund and manage fund and short-term fund and also find the highest return.
Functions
Anticipation – Financial planning both long and short term plan
Acquisition – Finding source of fund – lower cost
Allocation
A.Chatchai Masunsub MSc.Sport
Management,Sheffield Hallam University,
UK