Business Economics

• 26 hrs lectures
• 26 hrs exercises

The aim of the course is to introduce students to the basic theoretical knowledge of business economics and the interdependence of relationships in business practice. The economic aspect of the subject is emphasized in the lectures and the emphasis is placed on the acquisition of professional terminology. Students acquire professional knowledge and skills in business economic management, which are divided into six blocks and complement each other. Upon completion of the course, students will:

• can define a business, business, understand the business environment, business objectives, understand the business life cycle,
• can define the asset and capital structure of an enterprise and the factors that influence them;
• can explain the nature of financing and investing in an enterprise;
• can explain the concepts of revenue, costs, profit and loss, value added;
• can explain the nature and importance of financial analysis, including the measurement of business performance;
• can explain the nature of value management;
• be able to prepare cost and price calculations;
• define and analyse the turning point;
• define the basic control tools of economic management of an enterprise.

On the basis of the knowledge and skills acquired, students should be able to practically apply knowledge of business economics to lower functions in the enterprise or in the business itself. The course provides a comprehensive view of business economics and forms the basis for the teaching of related vocational subjects in the upper years of study.

Secondary school knowledge and skills.

1. Basic categories of business economics.

• Business (legal form of business, function of business) and stakeholders of the business.
• Characteristics of business objectives. System of managing strategic objectives of the business.
• Life cycle of the business.

2. Asset and capital structure of the business.

• Business assets (long-term and short-term assets).
• Factors influencing the asset structure.
• Enterprise capital (equity and debt capital). Overcapitalization and undercapitalization.
• Optimal capital structure (average cost of capital – WACC).
• Enterprise balance sheet.

3. Production activities of an enterprise.

· Revenues and costs, operating results and their interrelationships.

· Economy, economic efficiency, economic effectiveness.

· Cost functions of a company.

· Basic methods for determining the cost function of a company.

· Compiling a start-up budget.

4. Economic decision-making.

· Cost management (classification of costs by type and purpose).

· Calculation of costs. Calculations.

· Classification of costs depending on production volume.

· Managerial approach to costs. Relationship between profit, production volume, price, and costs.

· Sensitivity analysis of individual parameters.

5. Production and supply activities of the company

· Determination of production capacity.

· Modeling of the basic production process.

· Compilation of individual types of material stocks.

· ABC and JIT inventory management methods.

6. Financial and investment decision-making in the company.

· Basics of company financing (external and internal financing sources).

· Working capital management (cash conversion cycle, net working capital analysis).

· Cash flow management.

· Inventory and receivables management.

· Investment decision-making (time value of money).

· Evaluation of the economic efficiency of investments.

7. Performance measurement and enterprise value management.

· Financial analysis methods (analysis of absolute indicators, analysis of differential indicators, analysis of ratio indicators). Pyramid systems of indicators.

· Enterprise value management. Economic value added.

8. Control tools for economic management.

• Financial accounting.
• Analyses.
• Budgets.
• Controlling and internal audit.
• Human resources.

1. Test questions and supplementary tasks practicing basic concepts of business economics such as enterprise, entrepreneur, business, legal forms of business, objectives of the enterprise, shareholders and stakeholders, environment of the enterprise, classification of the enterprise according to individual categories.
2. Test questions and supplementary tasks practising the different stages of the business life cycle. Case studies aimed at determining the basic characteristics of a specific model enterprise according to the categories of enterprise classification, the division of entities into shareholders and stakeholders and their location in the environment of the enterprise , determining the stage of the life cycle in which the enterprise is located.
3. Numerical examples aimed at compiling the components of the assets of the enterprise according to the structure of assets in the balance sheet, determining the value of total assets, fixed and current assets and their share of total assets. Calculation of liquidity ratios and activity ratios.
4. Numerical examples focusing on the composition of the capital components of the enterprise according to the structure of liabilities in the balance sheet, determining the amount of the value of total liabilities, equity and foreign resources and their share in total liabilities. Calculation of undercapitalisation and overcapitalisation ratios. Calculation of debt ratios. Calculation of the optimal capital structure using the WACC ratio.
5. Numerical examples focusing on the analysis of net working capital , cash turnover cycle, cash requirements for financing current assets. Numerical examples focusing on discount and interest. Numerical examples focusing on the construction of Cash Flow by direct and indirect methods.
6. Numerical examples focused on calculating present and future value. Numerical examples focusing on methods of evaluating the economic efficiency of investments.
7. Verification of the knowledge of the material covered and practiced in Units 1 - 3 by means of numerical examples.
8. Numerical examples focused on the compilation of the cost and income components of a company according to the structure of the profit and loss account, determining the value of the company's profit before tax and for the current accounting period. Calculation of EBIT, EBT, EAT.
9. Numerical examples focused on the calculation of operating ratios (cost of revenues, productivity) and profitability ratios. Calculation of the economic value added ratio.
10. Numerical example focused on financial analysis of a model of a specific enterprise using the methods - analysis of absolute ratios, analysis of difference ratios, analysis of ratio ratios, pyramid system of ratios.
11. Numerical examples focusing on the calculation of full own cost (type calculation formula; division calculation - simple division calculation, step calculation, ratio calculation; mark-up calculation).
12. Numerical examples focusing on the calculation of incomplete own costs (one-stage, two-stage). Numerical examples aimed at analysing the turning point and determining the value of the minimum volume, minimum price, maximum variable cost and maximum fixed cost of the product at which the firm achieves zero profit.
13. Verification of the knowledge of the lectured and practiced material from the 4th, 5th block of the course by means of numerical examples.

There is the oral examination. Skills of the student are tested on two tests.
Two tests:
TEST I (7.- 8. week): 20 points
TEST II (11-12.week): 20 points
Minimum number of points to get the credit: 25 points.
The grade is given on the basis of two control tests and oral examination.

The checking during the semester is based on the completion of two tests. In the case of excused absence from seminars, teacher can, in justified cases, set a alternative condition - usually the procession of the alternative