[MUSIC] I'm here at the corner of Paseo de Gracia and Gran Via right in front of Zara. The world's leading clothing store. Zara is the flagship brand of Inditex. A fast fashion company with more than 6,500 stores around the world and sales of over 18 million Euros. Inditex employs more than 140,000 people around the world. As you can imagine, recording and reporting the financial information of this business is crucial to follow its performance to analyze how well the business is doing. And for a business of this scale, there are many transactions to be accounted for and a lot of financial information for managers and shareholders to grasp in order to make some decisions. So how does Zara, or any other company for that matter report its financial information, cashflows, income, the financial position. That's what I'm here to talk about, but now let's back up a little bit and we're going to set up the foundations, so that by the end of this course we'll come back here and you'll be able to read and understand the financial statements of Zara [MUSIC] Hello and welcome to Accounting Making Sound Decisions. The first of five courses in the foundations of management specialization. My name is Marc Badia and I'm Assistant Professor in Accounting and Control Department of IESE Business School. I'm here to help you understand what accounting is all about and also to make you realize about how important it is to have a good grasp of basic accounting concepts. My goal is that by the end of this four week course, you're able to read and understand financial statements for decision making. So the goal of this course is not that you become accountants. Although maybe some of you are thinking of it. But that you become proficient users of financial information. Even though this course is introductory, I want to set the foundations, the solid foundations so that in the future you can keep learning on your own more complex accounting issues. This course is going to be very practical. We're going to learn by doing. We're going to account for different transactions that take place in a business and we're going to prepare the financial statement, the summary reports that companies provides to external users such shareholders. Then we're going to read and interpret these financial statements. As you see in the course outline, the first three weeks, we're going to introduce the three main financial statements. The Balance Sheet, the Income Statement and the Cash Flow Statement. Today, in Week 1, we're going to start by introducing the balance sheet, a summary of all the sources of capital and uses of capital in the company. Next week, we're going to introduce the second financial statement, the income statement. The income statement explains the profitability of the business. On the third week, we're going to introduce the cash flow statement, which is going to explain the generation and consumption of cash in the business. So it's going to give information about the liquidity of the business. And finally in week 4, I'm going to explain much better the difference between the profitability and the liquidity of the business with all its implications. We also going to analyze the evolution the performance of the company that we have used as an example throughout all the course. At the end, we're going to read and interpret the financial statements of a real large corporation so that you can see the progress you have made. So please, come with me and let's master the language of business once and for all. [MUSIC]