Principles of Finance

Unit 1 – Introduction to Finance

Unit 2 – Corporate Structure and Governance

Unit 3 – Economic Foundations: Money & Interest Rates

Unit 4 – Accrual Accounting Process

Unit 5 – Financial Statements

Unit 6 – Measures of Financial Health

Unit 7 – Time Value of Money: Single Payments

Unit 8 – Time Value of Money: Multiple Payments

Unit 9 – Time Value of Money: Unequal Payments

Unit 10 – Bonds and Bond Valuation

Unit 11 – Stocks and Stock Valuation

Unit 12 – US Market Performance: A Historical View

Unit 13 – Statistical Analysis in Finance

Unit 14 – Regression Analysis in Finance

Unit 15 – How to Think about Investing

Unit 16 – How Companies Think about Investing

Unit 17 – How Firms Raise Capital

Unit 18 – Financial Forecasting

Unit 19 – Trade Credit and Working Capital in Finance

Unit 20 – Risk Management in Financial Management

## What do you learn in Principles of Finance

Principles of Finance covers the basics of financial management and decision-making. You'll learn about time value of money, risk and return, capital budgeting, and financial markets. The course also dives into stock and bond valuation, capital structure, and dividend policy. It's all about understanding how companies make financial choices and how investors evaluate opportunities.

## Is Principles of Finance hard?

Principles of Finance can be challenging, especially if you're not a numbers person. The concepts aren't rocket science, but they can get pretty abstract. You'll need to wrap your head around formulas and financial models, which can be tricky at first. But don't worry, with practice and some real-world examples, it starts to click. The math isn't too advanced, but you'll definitely be using your calculator a lot.

## Tips for taking Principles of Finance in college

1. Use [Fiveable Study Guides](https://fiveable.me/cram-mode) to help you cram 🌶️
2. Practice, practice, practice! Do as many problem sets as you can
3. Stay on top of financial news - it helps connect concepts to real life
4. Form a study group to tackle tough problems together
5. Master your financial calculator early on - it'll save you tons of time
6. Watch "The Big Short" for a fun look at financial markets
7. Read "Rich Dad Poor Dad" for personal finance insights
8. Don't just memorize formulas - understand the logic behind them

## Common pre-requisites for Principles of Finance

1. Introductory Accounting: Learn the basics of financial statements and how to record business transactions. You'll get familiar with balance sheets, income statements, and cash flow statements.

2. Microeconomics: Study how individuals and firms make decisions in markets. You'll explore concepts like supply and demand, market equilibrium, and consumer behavior.

3. Statistics: Dive into data analysis and probability theory. This course will give you tools to interpret financial data and make predictions based on past trends.

## Classes similar to Principles of Finance

1. Corporate Finance: Focuses on how companies make financial decisions. You'll learn about capital structure, dividend policy, and mergers and acquisitions.

2. Investments: Covers portfolio theory, asset pricing models, and securities analysis. It's all about understanding how to build and manage investment portfolios.

3. Financial Markets and Institutions: Explores the structure and functions of various financial markets. You'll learn about banks, insurance companies, and other financial intermediaries.

4. Financial Risk Management: Teaches you how to identify, measure, and manage financial risks. You'll learn about derivatives, hedging strategies, and risk assessment techniques.

## Majors related to Principles of Finance

1. Finance: Focuses on managing money, investments, and financial systems. Students learn about financial markets, corporate finance, and investment strategies.

2. Economics: Studies how societies allocate resources and make economic decisions. It covers topics like market behavior, economic policy, and international trade.

3. Accounting: Deals with recording, analyzing, and reporting financial information. Students learn how to prepare financial statements and understand tax regulations.

4. Business Administration: Provides a broad overview of business operations. It covers finance, marketing, management, and entrepreneurship.

## What can you do with a degree in Principles of Finance?

1. Financial Analyst: Evaluates investment opportunities and provides recommendations to businesses or individuals. They analyze financial data, study economic trends, and create financial models.

2. Investment Banker: Helps companies and governments raise capital by issuing and selling securities. They also provide advice on mergers and acquisitions and other financial transactions.

3. Financial Planner: Assists individuals in managing their personal finances and achieving financial goals. They create comprehensive plans covering investments, insurance, taxes, and retirement.

4. Risk Manager: Identifies and assesses financial risks faced by organizations. They develop strategies to mitigate these risks and ensure the company's financial stability.

## Principles of Finance FAQs

1. Do I need to be good at math to succeed in this course? While you don't need to be a math whiz, being comfortable with basic algebra and statistics definitely helps. The course focuses more on applying concepts than complex calculations.

2. How relevant is this course for non-finance majors? Very relevant! Understanding financial principles is useful in any career and for personal money management. It's especially helpful for anyone planning to run a business or manage a department.

3. Are there any online resources to supplement the course material? Absolutely! Websites like Investopedia and Khan Academy have great explanations of finance concepts. There are also tons of YouTube channels dedicated to breaking down finance topics.

Finance

1.1 What Is Finance?

1.2 The Role of Finance in an Organization

1.3 Importance of Data and Technology

1.4 Careers in Finance

1.5 Markets and Participants

1.6 Microeconomic and Macroeconomic Matters

1.7 Financial Instruments

1.8 Concepts of Time and Value

2.1 Business Structures

2.2 Relationship between Shareholders and Company Management

2.3 Role of the Board of Directors

2.4 Agency Issues: Shareholders and Corporate Boards

2.5 Interacting with Investors, Intermediaries, and Other Market Participants

2.6 Companies in Domestic and Global Markets

3.1 Microeconomics

3.2 Macroeconomics

3.3 Business Cycles and Economic Activity

3.4 Interest Rates

3.5 Foreign Exchange Rates

3.6 Sources and Characteristics of Economic Data

4.1 Cash versus Accrual Accounting

4.2 Economic Basis for Accrual Accounting

4.3 How Does a Company Recognize a Sale and an Expense?

4.4 When Should a Company Capitalize or Expense an Item?

4.5 What Is “Profit” versus “Loss” for the Company?

5.1 The Income Statement

5.2 The Balance Sheet

5.3 The Relationship between the Balance Sheet and the Income Statement

5.4 The Statement of Owner’s Equity

5.5 The Statement of Cash Flows

5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF)

5.7 Common-Size Statements

5.8 Reporting Financial Activity

6.1 Ratios: Condensing Information into Smaller Pieces

6.2 Operating Efficiency Ratios

6.3 Liquidity Ratios

6.4 Solvency Ratios

6.5 Market Value Ratios

6.6 Profitability Ratios and the DuPont Method

7.1 Now versus Later Concepts

7.2 Time Value of Money (TVM) Basics

7.3 Methods for Solving Time Value of Money Problems

7.4 Applications of TVM in Finance

8.1 Perpetuities

8.2 Annuities

8.3 Loan Amortization

8.4 Stated versus Effective Rates

8.5 Equal Payments with a Financial Calculator and Excel

9.1 Timing of Cash Flows

9.2 Unequal Payments Using a Financial Calculator or Microsoft Excel

10.1 Characteristics of Bonds

10.2 Bond Valuation

10.3 Using the Yield Curve

10.4 Risks of Interest Rates and Default

10.5 Using Spreadsheets to Solve Bond Problems

11.1 Multiple Approaches to Stock Valuation

11.2 Dividend Discount Models (DDMs)

11.3 Discounted Cash Flow (DCF) Model

11.4 Preferred Stock

11.5 Efficient Markets

12.1 Overview of US Financial Markets

12.2 Historical Picture of Inflation

12.3 Historical Picture of Returns to Bonds

12.4 Historical Picture of Returns to Stocks

13.1 Measures of Center

13.2 Measures of Spread

13.3 Measures of Position

13.4 Statistical Distributions

13.5 Probability Distributions

13.6 Data Visualization and Graphical Displays

13.7 The R Statistical Analysis Tool

14.1 Correlation Analysis

14.2 Linear Regression Analysis

14.3 Best-Fit Linear Model

14.4 Regression Applications in Finance

14.5 Predictions and Prediction Intervals

14.6 Use of R Statistical Analysis Tool for Regression Analysis

15.1 Risk and Return to an Individual Asset

15.2 Risk and Return to Multiple Assets

15.3 The Capital Asset Pricing Model (CAPM)

15.4 Applications in Performance Measurement

15.5 Using Excel to Make Investment Decisions

16.1 Payback Period Method

16.2 Net Present Value (NPV) Method

16.3 Internal Rate of Return (IRR) Method

16.4 Alternative Methods

16.5 Choosing between Projects

16.6 Using Excel to Make Company Investment Decisions

17.1 The Concept of Capital Structure

17.2 The Costs of Debt and Equity Capital

17.3 Calculating the Weighted Average Cost of Capital

17.4 Capital Structure Choices

17.5 Optimal Capital Structure

17.6 Alternative Sources of Funds

18.1 The Importance of Forecasting

18.2 Forecasting Sales

18.3 Pro Forma Financials

18.4 Generating the Complete Forecast

18.5 Forecasting Cash Flow and Assessing the Value of Growth

18.6 Using Excel to Create the Long-Term Forecast

19.1 What Is Working Capital?

19.2 What Is Trade Credit?

19.3 Cash Management

19.4 Receivables Management

19.5 Inventory Management

19.6 Using Excel to Create the Short-Term Plan

20.1 The Importance of Risk Management

20.2 Commodity Price Risk

20.3 Exchange Rates and Risk

20.4 Interest Rate Risk

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