Accounting and Financial Management: Securities, Investment, and Financing Notes

Stocks and Securities Accounting: Purchases, Sales, and Earnings

Stock Purchase Procedures and Calculations

• Initial Transaction Data (Green Trend AG):     * Purchaser: Andrea Kästner Mountainbikes e. Kfr., Stamsrieder Weg 50, 85049 Ingolstadt.     * Bank: DONAUBANK INGOLSTADT.     * Security Designation: Green Trend AG (WKN: 238102 / ISIN: DE0098765435).     * Order Type: "Billigst" (at best/lowest current price).     * Exchange: Frankfurt.     * Settlement Date (Schlusstag): 03.03.20..     * Value Date (Valuta): 04.03.20..
• Purchase Price Components:     * Quantity (Stück): $125$     * Price per Share (Stückkurs): $121.40\,\text{€}$     * Market Value (Kurswert): $\text{Quantity} \times \text{Price per Share} = 125 \times 121.40\,\text{€} = 15,175.00\,\text{€}$     * Bank Fees/Expenses (Spesen): $1\%$ of Market Value ($151.75\,\text{€}$).
• Total Acquisition Cost (Book Value):     * Calculated as Market Value ($100\%\text{)}$ plus Expenses ($1\%\text{)}$ for a total of $101\%$.     * $\text{Total Cost} = 15,175.00\,\text{€} + 151.75\,\text{€} = 15,326.75\,\text{€}$     * Accounting Principle: Expenses are "activated" (added to the asset value) during a purchase.
• Accounting Entry (Buchungssatz):     * $1500\,\text{WP}\ 15,326.75\,\text{€}\ \text{an}\ 2800\,\text{BK}\ 15,326.75\,\text{€}$

Stock Sale with Profit (Kursgewinn)

• Transaction Context: Selling 125 shares of Green Trend AG on 08.12.20.. at a price of $144.00\,\text{€}$.
• Calculations:     * Market Value (Kurswert): $125 \times 144.00\,\text{€} = 18,000.00\,\text{€}$     * Expenses (Spesen): $1\%\ \text{of}\ 18,000.00\,\text{€} = 180.00\,\text{€}$     * Net Bank Credit (Bankgutschrift): $\text{Market Value} - \text{Expenses} = 18,000.00\,\text{€} - 180.00\,\text{€} = 17,820.00\,\text{€}$
• Profit Determination (Erfolgsermittlung):     * $\text{Net Credit} - \text{Book Value} = \text{Profit}$     * $17,820.00\,\text{€} - 15,326.75\,\text{€} = 2,493.25\,\text{€}$
• Accounting Entry (Buchungssatz):     * $2800\,\text{BK}\ 17,820.00\,\text{€}\ \text{an}\ 1500\,\text{WP}\ 15,326.75\,\text{€}\ \text{und}\ 5450\,\text{EAWP}\ 2,493.25\,\text{€}$     * EAWP stands for Erträge aus dem Abgang von Wertpapieren (Income from the disposal of securities).

Stock Sale with Loss (Kursverlust)

• Transaction Context: AK-Bikes sells 150 shares of BAVARIAWINGS AG. These shares were on the books (Book Value) for $15,756.00\,\text{€}$. Sale price is $59.40\,\text{€}$ per share.
• Calculations:     * Market Value: $150 \times 59.40\,\text{€} = 8,910.00\,\text{€}$     * Expenses: $1\%\ \text{of}\ 8,910.00\,\text{€} = 89.10\,\text{€}$     * Net Bank Credit: $8,910.00\,\text{€} - 89.10\,\text{€} = 8,820.90\,\text{€}$
• Loss Determination:     * $\text{Net Credit} - \text{Book Value} = \text{Loss/Profit}$     * $8,820.90\,\text{€} - 15,756.00\,\text{€} = -6,935.10\,\text{€}$
• Accounting Entry (Buchungssatz):     * $2800\,\text{BK}\ 8,820.90\,\text{€}\ \text{und}\ 6530\,\text{VAWP}\ 6,935.10\,\text{€}\ \text{an}\ 1500\,\text{WP}\ 15,756.00\,\text{€}$     * VAWP stands for Verluste aus dem Abgang von Wertpapieren (Losses from the disposal of securities).

Dividends and Custody Fees

• Dividends (Beleg 1):     * Definition: Dividend is the profit distribution of a stock corporation (AG).     * Scenario: Credit of dividends for 125 Green Trend AG shares totaling $118.75\,\text{€}$.     * Formula: $\text{Total Dividend} = \text{Quantity of Shares} \times \text{Dividend per Share}$     * Accounting Entry: $2800\,\text{BK}\ 118.75\,\text{€}\ \text{an}\ 5780\,\text{DDE}\ 118.75\,\text{€}$
• Custody Fees (Beleg 2):     * Context: Bank debit for security account management (Depotgebühren).     * Amount: $67.00\,\text{€}$     * Account used: $6750\,\text{KGV}$ (Kosten des Geldverkehrs / Expenses of monetary transactions).     * Accounting Entry: $6750\,\text{KGV}\ 67.00\,\text{€}\ \text{an}\ 2800\,\text{BK}\ 67.00\,\text{€}$

Investment Strategies and Asset Types

The Magic Triangle of Investment

• Investment involves three competing goals that cannot be maximized simultaneously:     1. Safety (Sicherheit): How risky is the investment?     2. Liquidity (Liquidität): How quickly can the invested money be accessed/available?     3. Yield/Profit (Rendite): How much return does the investment generate?
• Asset Comparison:     * Demand Deposits (Sichteinlagen): High Safety, High Liquidity, Low Rentability.     * Real Estate (Immobilien): High Safety, Low Liquidity, Low to High Rentability.     * Gold: High Safety, Medium Liquidity, Variable Rentability.     * Stocks (Aktien): Low Safety, High Liquidity, High potential Rentability.
• Solution Strategy: Diversification (Risikostreuung) — allocating available funds across different investment opportunities to mitigate risk.

Bank Deposits

• Demand Deposits (Sichteinlagen):     * Term: None.     * Access: Anytime.     * Purpose: Handling daily payment transactions (e.g., Business checking account / Geschäftsgirokonto, Call money account / Tagesgeldkonto).     * Return: Regular interest credits.
• Term Deposits (Termineinlagen/Festgelder):     * Term: Fixed.     * Access: Only after a fixed period or notice.     * Purpose: Investing non-required funds.     * Return: Interest at maturity; compound interest effects.
• Savings Deposits (Spareinlagen):     * Term: Indefinite (unbefristet).     * Access: After a notice period of at least 3 months.     * Purpose: Long-term saving (e.g., Savings book / Sparbuch, Savings bond / Sparbrief).     * Return: Interest credits increase the deposit.
• Accounting Interest Income:     * Scenario: Interest credit of $60.00\,\text{€}$ for a fixed-term deposit.     * Entry: $2800\,\text{BK}\ 60.00\,\text{€}\ \text{an}\ 5710\,\text{ZE}\ 60.00\,\text{€}$ ($ZE = Zinserträge$/Interest Income).

Real Estate and Precious Metals

• Real Estate (Immobilien) Pros: Independence from stock markets, inflation protection, tangible asset value, tax savings (interest deduction for credit-financed assets), potential value appreciation.
• Real Estate Cons: High purchase side costs (e.g., Notary), long-term capital commitment, maintenance costs, high administrative effort for rentals.
• Rental Accounting:     * Scenario: Rental credit of $835.00\,\text{€}$ (Gross/brutto).     * Entry: $2800\,\text{BK}\ 835.00\,\text{€}\ \text{an}\ 5400\,\text{EMP}\ 700.00\,\text{€}\ \text{und}\ 4800\,\text{UST}\ 135.00\,\text{€}$ ($EMP = Erträge aus Vermietung und Verpachtung$, $UST = Umsatzsteuer$).
• Precious Metals Examples: Gold, Silver, Platinum, Palladium.

Financing and Credits

Alternative Financing Options

• Leasing: Provision of capital goods in exchange for a leasing fee.     * Parties: Seller (delivers good), Lessor (pays seller, provides good and receives lease from user), Lessee (e.g., AK-Bikes, uses good and pays rates).     * Pros: Liquidity maintenance (reduced capital requirement), cost certainty, access to latest tech.     * Cons: No ownership, usually more expensive than purchasing.
• Factoring: Selling accounts receivable (customer debts) before they are due to a financial institution (Factor).     * Pros: Immediate liquidity improvement.
• Public Funding (Staatliche Fördermittel):     * Institutions: LfA Förderbank Bayern, KfW Bankengruppe.     * Focus Areas: Start-up loans, research and development grants, rural investment subsidies, credit guarantees.     * Benefits: Lower interest rates, longer terms, easier repayment conditions.

Supplier Credit (Lieferantenkredit)

• Mechanism: A deferral of payment granted by a supplier (e.g., "due in 30 days net").     * Duration: Payment target minus cash discount period.     * Cost of Supplier Credit: Often represent "lost cash discount" (Skonto), which translates into a very high annual interest rate if missed.
• Comparison Calculation Scenario:     * Invoice Amount: $22,848.00\,\text{€}$. Terms: $3\%$ cash discount if paid in 10 days, otherwise net in 30 days.     * Step 1: Supplier Credit Costs (Lost Skonto):         * Gross Skonto ($3\%\text{)}$: $685.44\,\text{€}$.         * Net Skonto ($81\% \text{ after tax adjustments within the goods account): } 576.00\,\text{€}$.     * Step 2: Bank Overdraft (Kontokorrentkredit) Costs (to take discount):         * Amount needed: Gross invoice minus gross discount = $22,162.56\,\text{€}$.         * Interest days: $20$ days ($30 - 10$).         * Bank interest rate: $8.5\%\text{ p.a.}$.         * $\text{Interest} = \frac{22,162.56 \times 8.5 \times 20}{100 \times 360} = 104.66\,\text{€}$.     * Comparison: Taking the bank loan and paying early saves $576.00\,\text{€} - 104.66\,\text{€} = 471.34\,\text{€}$.

Overdraft Facilities (Dispokredit and Kontokorrentkredit)

• Dispositionskredit (Dispo): For private customers on checking accounts to bridge short-term bottlenecks. Based on creditworthiness and regular income.
• Kontokorrentkredit: The business equivalent of the personal overdraft.     * Credit Line (Limit): Upper bound of the granted credit.     * Tolerated Overdrawing (Geduldete Überziehung): Exceeding the limit with bank permission, subject to very high interest rates.
• Features: Short-term, flexible, high interest rates ($7.90\%\text{ to } 11.90\%\text{ p.a.}$ range shown).
• Accounting Entry for Fee: $6750\,\text{KGV}\ 8.50\,\text{€}\ \text{an}\ 2800\,\text{BK}\ 8.50\,\text{€}$.

Loan Types for Investment

1. Festdarlehen (Bullet Loan): Repayment in a single lump sum at the end of the term. Interest remains constant and high over life (applied to full principal).
2. Annuitätendarlehen (Annuity Loan): Fixed annual installment (Rate) consisting of decreasing interest and increasing principal repayment (Tilgung). Offers predictability.
3. Abzahlungsdarlehen (Amortizing Loan): Fixed principal repayment amounts. Total rate decreases over time as interest cost drops. Lower total interest burden compared to others.

Advanced Credit Calculations and Ratios

Effective Interest Rate Calculation ($p_{\text{eff}}$)

• Used for comparing loan offers when a Disagio (discount on payout) is involved.
• Disagio: A percentage of the loan amount withheld by the bank as prepaid interest.
• Calculation Steps (Example iBank):     1. Payout amount: $\text{Loan amount } (40,000.00\,\text{€}) - \text{Disagio } (1.5\% = 600.00\,\text{€}) = 39,400.00\,\text{€}$.     2. Total costs: $\text{Interest expenses } (672.00\,\text{€}) + \text{Disagio } (600.00\,\text{€}) = 1,272.00\,\text{€}$.     3. Formula: $p_{\text{eff}} = \frac{\text{Total Costs} \times 100 \times 360}{\text{Payout Amount} \times \text{Term in days}}$     4. Result: $p_{\text{eff}} = \frac{1,272.00 \times 100 \times 360}{39,400.00 \times 288} = 4.04\%$

German Interest Calculation Method (Deutsche Zinsmethode)

• Base units: Year = $360$ days; Month = $30$ days.
• Day Counting: Do not count the first day, do count the last.
• General Formula: $\text{Interest (Z)} = \frac{\text{Capital (K)} \times \text{Rate (p)} \times \text{Time in days (t)}}{100 \times 360}$

Financial Ratios and Golden Rule

• Equity Ratio (Eigenkapitalquote): Measures the share of equity in total assets.     * $\text{Ratio } (\%) = \frac{\text{Equity} \times 100}{\text{Total Assets}}$     * AK-Bikes Example: $\frac{1,643,000.00 \times 100}{2,650,000.00} = 62.00\%$     * A higher ratio indicates financial independence and crisis resilience.
• Golden Rule of Financing (Goldene Finanzierungsregel): Matching maturities (Fristenkongruenz). Long-term assets (fixed assets) should be financed with long-term capital (equity + long-term debt).     * AK-Bikes check: Fixed Assets ($1,560,000.00\,\text{€}$) are fully covered by Long-term Capital ($1,643,000.00 + 725,000.00 = 2,368,000.00\,\text{€}$). The rule is fulfilled.