The “Business Economics and Organisation” course aims to provide students with the methodological tools and operating techniques to tackle the firm’s economic dimension. In a new economic context where engineers not only face technical and technological issues but also manage and coordinate resources, this course helps Building Engineers approach business culture and assess firm processes.
At the end of the course, students will be able to write and read a firm’s financial statements and apply the knowledge acquired for the assessment of short and long-term business decisions (such as break-even analysis, make or buy analysis, investment appraisals).
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Teaching activities are conducted through frontal lectures and exercise sessions. Particular attention during class time is devoted to direct interaction and dialogue with students, who are encouraged to propose topics for further discussion. Examples and applications are particularly focused on the construction and real estate sectors.
The final exam takes place in written form and the assessment is expressed in thirtieths. The test lasts three hours and consists of numerical exercises and open questions covering the theoretical aspects of the course. The results are published on the course web page. Students obtaining a sufficient score on the test (at least 18/30) may directly register the grade achieved. The exam mode is the same for both attending and non-attending students.
The course is divided into three units, headed by an introductory lecture on the firm and its context.
0. THE FIRM AND ITS CONTEXT
1. Introduction to the firm: nature, characteristics, legal forms, objectives, sources of funding. 2. Construction companies: distinguishing characteristics, taxonomies, descriptive statistics.
I. FINANCIAL ACCOUNTING
1. Aims, characteristics and composition of financial statements: objectives of financial accounting, general criteria and accounting principles for the preparation of financial statements, prospectuses comprising a firm’s financial statements. 2. Preparation of financial statements: accounting entries and double entry book keeping, closing. 3. Reclassification of the Income Statement and the Balance Sheet. 4. Ratio analysis: reading a firm’s financial statements and evaluating its performance via economic and financial ratios. 5. Cash flow analysis.
II. SHORT-TERM DECISIONS
1. Introduction to cost accounting. 2. Economic models supporting short-term decisions: cost-volume-profit and break-even analysis, optimal product mix under constraints, choices among alternatives, contribution analysis.
IV. LONG-TERM DECISIONS (CAPITAL BUDGETING)
1. Financial mathematics tools: financial transactions, understanding interest rates, present value and future value, annuities and perpetuities. 2. Investments valuation techniques: definition of an investment project, types of investment projects, estimating cash flows, valuation criteria of independent projects, purchasing vs. leasing decisions, choice among alternative projects.
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