The assignment will consist of a two paragraph/+200 word essay of a relevant news article

lecture_12.pptx

Home >Business & Finance homework help >The assignment will consist of a two paragraph/+200 word essay of a relevant news article

Lecture1 Introduction to SAP and Finance Review

FIN419

Learning Objectives

Understand the background of SAP as a company

Identify the different elements of the SAP R/3 Architecture

List the existing SAP solutions available in the market place

Understand the basics of SAP navigation

Review Finance basic concepts

Forms of business organizations

Goal of financial management

Agency Cost

SAP Introduction

SAP stands for Systems, Applications, and Products in Data processing

Very successful Enterprise Resource Planning (ERP) solution which is used to highly integrate business processes.

Fall 2015

SAP Introduction Name of Company and Software

Name of the Company

SAP AG (Walldorf)

SAP America (New Town Square)

Name of the Software

SAP R/2

SAP R/3

SAP ERP

Fall 2015

SAP Introduction Company Statistics

SAP AG

Founded in Walldorf, Germany in 1972

World’s Largest Business Software Company

World’s Third-largest Independent Software Provider

Company Statistics

Over 40,000 employees in more then 50 countries

1500 Business Partners

36,200 customers in more then 120 countries

12 million users

100,600 installations

Fall 2015

SAP is the world's largest inter-enterprise software company and the world's third-largest independent software provider overall. We have a rich history of innovation and growth that has made us a true industry leader.

SAP Americas

12 Million Users. 100,600 Installations. 1,500 Partners.

SAP Americas is a subsidiary of SAP AG, the world's largest inter-enterprise software company and the third-largest software supplier overall. SAP Americas's corporate headquarters is located in Newtown Square, PA, a suburb of Philadelphia. Our officers and executives lead a team of professionals dedicated to delivering high-level customer support and services.

Founded in 1972 as Systems Applications and Products in Data Processing, SAP has a rich history of innovation and growth that has made us the recognized leader in providing collaborative business solutions for all types of industries -- in every major market. The company, headquartered in Walldorf, Germany, employs more than 37,700 people in more than 50 countries, and serves more than 34,600 customers worldwide.

Experience, Knowledge, and Technology for Maximizing Business

SAP has leveraged our extensive experience to deliver mySAP Business Suite, the definitive family of business solutions for today's economy. These solutions are open and flexible, supporting databases, applications, operating systems, and hardware from almost every major vendor. What's more, mySAP Business Suite allows employees, customers, and business partners to work together successfully -- anywhere, anytime.

By deploying the best technology, services, and development resources, SAP has delivered a business platform that unlocks valuable information resources, improves supply chain efficiencies, and builds strong customer relationships. And through the Global Solution Center, SAP Americas identifies customer needs and develops solutions to meet these needs.

SAP is listed on several exchanges, including the Frankfurt Stock Exchange and the New York Stock Exchange, under the symbol "SAP."

SAP Introduction SAP 3-Tier Architecture

3-tier client-server architecture

Database layer

One single data repository

Application layer

One or more, help distribute work load

Client layer (Presentation layer )

Graphical User Interface or Web Interface (GUI)

Fall 2015

Central database stores all data and application programs.

The application gives access to the database to read and write data.

The presentation allows for input/output of data to the users

3-tier client server system

Web server

Internet transaction server

Brings it to a single database across the world.

What is Client-server Computing?

The short answer: Client/server is a computational architecture that involves client processes requesting service from server processes. The long answer: Client/server computing is the logical extension of modular programming. Modular programming has as its fundamental assumption that separation of a large piece of software into its constituent parts ("modules") creates the possibility for easier development and better maintainability. Client/server computing takes this a step farther by recognizing that those modules need not all be executed within the same memory space. With this architecture, the calling module becomes the "client" (that which requests a service), and the called module becomes the "server" (that which provides the service). The logical extension of this is to have clients and servers running on the appropriate hardware and software platforms for their functions. For example, database management system servers running on platforms specially designed and configured to perform queries, or file servers running on platforms with special elements for managing files. It is this latter perspective that has created the widely-believed myth that client/server has something to do with PCs or Unix machines.

SAP Introduction From SAP R/3 to HANA

Database layer

From Oracle/ Ms SQL

To SAP HANA

Presentation layer

From SAP GUI

To SAP Fiori

Fall 2015

Central database stores all data and application programs.

The application gives access to the database to read and write data.

The presentation allows for input/output of data to the users

3-tier client server system

Web server

Internet transaction server

Brings it to a single database across the world.

What is Client-server Computing?

SAP Introduction Software Applications

Industry Solutions (Business Suite & Business All in One)

SAP ERP

SAP CRM

SAP SCM

SAP SRM

SAP PLM

Digital (Business Suite & Business All in One)

SAP S/4 on HANA

Success Factors & Fieldglass

Ariba, Concur

Hybris

Fall 2015

SAP Navigation SAP Logon Screen

Fall 2015

Choose your server and log in

When you log onto SAP, you are not directly logging onto SAP, but on a front end which is linked to the SAP database. The link is created by a program call SAP GUI (Graphical user interface). This is a the standard program which is used to access all SAP systems. We access SAP systems through the logon pad as shown. The logon pad has all the system addresses in it which allow you to connect the SAP system.

SAP Architecture: Concept of Client

Is a unit of commercial, organizational and technical terms self contained with separate master records and its own set of tables.

Application Server

Client 020

Client 010

Configuration

Master data

Configuration

Master data

Application data (transactions)

SAP Architecture: Standard SAP Landscape

Development

Server

Client 010

Client XX1

Client XX2

Quality

Server

Client 010

Client XX1

Client XX2

Production

Server

Client 010

SAP Navigation IDES System and Client

IDES stands for “Internet Demo and Evaluation System”

It is a complete R/3 System containing a model company with data at client level (application layer)

Client

A client is a unit of the R/3 System that is technically, organizationally and commercially self-contained

A client has its own set of user master data, application (transaction) data, and customizing based on table key ranges

All users must log in to a specific client within an R/3 system

Session

A session is a window in which the user may perform a particular task and can have up to nine sessions open at a time.

Fall 2015

What will our IDES at UT look like for the course

SAP Navigation User Logon Screen

Client

User ID

Password

Language

Fall 2015

Enter Client, Server and Password

Client is a numeric field and this number represents a whole business entity.

Users are client specific which means that having a user identification in one client will only allow access to that particular client.

The system settings are stored in a file on your machine called the saplogin.ini file. This file is normally preconfigured centrally and then made available to all the users. Once you have been provided with the SAP Logon, you need a username and password to logon to the SAP system. The username and password is unique for each user and you do have the option to change your password using the New password button available on the screen.

SAP Navigation Application Tool-bar

Enter icon

Command (T-code)

Save icon

Back button

Exit button

Cancel button

Print button

Find/Expand icons

Scroll icons

Create a new session

Create a desktop shortcut

Help icon

Fall 2015

Learning objective: basic navigation

You have an option to start an application by directly entering its transaction code in the command field which is hidden as default.

The push buttons in the standard toolbar are shown on every SAP screen. The push buttons that cannot be used in a specific application are deactivated. You can view the flag with the name or function of the push button if you place the cursor on it for a few seconds.

SAP Navigation SAP Easy Access Structure

The left side of the screen contains a tree hierarchy of the menus available to you in the SAP system.

The menu bar

Logistics

Materials Management

Purchasing (PU)

Inventory Management (IM)

Sales and Distribution (SD)

Production (PP)

Quality (QA)

Accounting

Financial Accounting (FI)

Financial Supply Chain (FSC)

Controlling (CO)

Human Resources (HR)

The transaction code (T-code)

Fall 2015

SAP Navigation Screen Features

Manu Bar

Title Bar

Customizing display bottoms

Entry

Required field

Default entry field

Optional entry field

Tool bars

Message bar

Fall 2015

SAP Navigation System Messages

E –Error

An invalid entry has been made. The cursor moves to the field where the error has occurred.

W-Warning,

Indicates a possible error. The user can continue without changing.

I –Information

Confirms a transaction was posted.

A –Abnormal End,

Indicating serious system error.

Fall 2015

SAP Navigation Logging Off

For security purposes it is important to log off SAP at the end of the day or whenever you leave your PC.

Your username is linked with every transaction you perform to provide an audit trail.

Fall 2015

When reviewing transactions or running reports the username of the person responsible for entering or maintaining system information is displayed.

Finance Review Forms of Business Organizations

The corporate form of business is the standard method for solving the problems encountered in raising large amounts of cash.

Three major forms in the United States

Sole proprietorship, a business own by one person

Partnership, a business own by two or more individuals or entities

General, with unlimited debt liability

Limited, with some partners with limited debt liability

Corporation, a legal “person” distinct from owners and with limited liability

General, subject to double taxation

S Corporation is taxed through its shareholders avoiding double taxation

Limited liability company allows to operate and tax like a partnership but retain limited liability for its owners

Finance Review A Comparison

Fall 2015

Corporation

Partnership

Liquidity

Shares can be easily exchanged

Subject to substantial restrictions

Voting Rights

Usually each share gets one vote

General Partner is in charge; limited partners may have some voting rights

Taxation

Double

Partners pay taxes on distributions

Reinvestment and dividend payout

Broad latitude

All net cash flow is distributed to partners

Liability

Limited liability

General partners may have unlimited liability; limited partners enjoy limited liability

Continuity

Perpetual life

Limited life

Corporations account for the largest volume of business (in dollar terms) in the U.S. Advantages include limited liability, unlimited life, separation of ownership and management (ability to own shares in several companies without having to work for all of them), liquidity, and ease of raising capital. Disadvantages include separation of ownership and management (agency costs) and double taxation. Recent tax laws reduce the level of double taxation, but it has not been eliminated.

Although the corporate form of organization has the advantage of limited liability, it has the disadvantage of double taxation. A small business of 75 or fewer stockholders is allowed by the IRS to form an S Corporation. The S Corp. organizational form provides limited liability but allows pretax corporate profits to be distributed on a pro rata basis to individual shareholders, who are only obligated to pay personal income taxes on the income. A similar form of organization is the limited liability corporation, or LLC. LLC’s are a hybrid form of organization that falls between partnerships and corporations. Investors in LLC’s have the protection of limited liability, but they are taxed like partnerships. LLC’s first appeared in Wyoming in 1977 and have skyrocketed since. They are especially beneficial for small- and medium-sized businesses such as law firms or medical practices.

A Corporation by Another Name…Corporations exist around the world under a variety of names. Table 1.2 lists several well-known companies, along with the type of company in the original language.

Finance Review The Goal of Financial Management

The goal is to increase the value of the firm by maximizing investments while minimizing financing.

V = Σ CFt / (1+ i)t

Maximize the current value per share of the exiting stock

Fall 2015

Learning Objective: Apply goals of financial management in making decisions

Possible Goals

Profit Maximization – this is an imprecise goal. Do we want to maximize long-run or short-run profits? Do we want to maximize accounting profits or some measure of cash flow? Because of the different possible interpretations, this should not be the main goal of the firm.

Other possible goals that students might suggest include minimizing costs or maximizing market share. Both have potential problems. We can minimize costs by not purchasing new equipment today, but that may damage the long-run viability of the firm. Many dot.com companies got into trouble in the late 1990’s because their goal was to maximize market share. They raised substantial amounts of capital in IPO’s and then used the money on advertising to increase the number of “hits” on their site. However, many firms failed to translate those “hits” into enough revenue to meet expenses, and they quickly ran out of capital. The stockholders of these firms were not happy. Stock prices fell dramatically, and it became difficult for these firms to raise funds. In fact, many of these companies have gone out of business. The Goal of Financial Management From a stockholder (owner) perspective, the goal of buying the stock is to gain financially. Thus, the goal of financial management in a corporation is to maximize the current value per share of the existing stock. Is it ethical to sell a product that is known to be addictive and dangerous to the health of the user even when used as intended? Is the fact that the product is legal relevant? Do recent court decisions against the companies matter? What about the way companies choose to market their product? Are these issues relevant to financial managers?

How do we go about maximizing shareholder wealth?

Finance Review The Importance of Cash Flow

Fall 2015

Short-term debt

Long-term debt

Equity shares

The cash flows from the firm must exceed the cash flows from the financial markets.

Cash flow from firm (C)

Taxes (D)

Government

Invests in assets (B)

Current assets Fixed assets

Ultimately, the firm must be a cash generating activity.

Firm

Financial markets

Retained cash flows (F)

Firm issues securities (A)

Dividends and debt payments (E)

To create value, the firm must generate more cash than it uses. Stated differently, the firm must generate sufficient cash flow, after taxes, to compensate investors for providing the firm with financing.

Additionally, the value of the cash flows generated by the firm must be analyzed in light of both the timing of the cash flows, as well as the risk of the cash flows.

It is an important reminder for students to reiterate that Net Income and Cash Flow can be extremely different values for various reasons, some of which are non-cash expenses (e.g., depreciation, amortization), revenue recognition principles, and credit policies.

It is important to remind students that net income is NOT cash flow.

Finance Review Agency Cost and Agency Problem

Agency relationship is the relationship that exist between stockholders and management

Principal hires an agent to represent its interests

Stockholders (principals) hire managers (agents) to run the company

Agency cost is the conflict of interest between stockholders and management

Stockholders goal is to increase the return on its investments (firm’s higher value)

Management may be more concern about its compensation or job security

Agency problem

Conflict of interest between principal and agent

Finance Review Do Managers Act in the Stockholders’ Interest?

Alignment between management and stockholders goals?

Managerial compensation

Incentives can be used to align management and stockholder interests

Incentives need to be carefully structured to insure that they achieve their goal

Can management be removed if goals are different?

Corporate control

Proxy fights is the mechanism on which unhappy stockholders can remove management

Poorly manage firms are more attractive to takeovers

Finance Review Regulation

The Securities Act of 1933 and the Securities Exchange Act of 1934

Issuance of Securities (1933)

Creation of SEC and reporting requirements (1934)

Sarbanes-Oxley (“SOx”)

Increased reporting requirements and responsibility of corporate directors

Financial Statements and Cash Flow

Fall 2015

Historically, most regulation has focused on the disclosure of relevant information, thereby putting all investors on an equal playing field.

The Securities Act of 1933 and the Securities Exchange Act of 1934

These Acts provide the basic regulatory framework for the public trading of securities in the United States. The 1933 Act focuses on the issuance of securities, while the 1934 Act established the SEC and addressed other regulatory issues, such as insider trading and corporate reporting.

Sarbanes-Oxley

Following the scandals at Enron, WorldCom, and Tyco, among others, “Sarbox” was enacted in 2002. This Act significantly increased the auditing and reporting requirements that public firms face, and it also explicitly placed the responsibility for any fraud on the corporate directors.

As with any law, however, there is a cost. In response to the added burden, many (particularly small) firms have delisted and others have foregone going public. For others, the cost of compliance has significantly increased, thereby reducing profits.