• Course Introduction

        • Time: 55 hours
        • Free Certificate
        Making financial decisions is something that we do in our personal lives, as well as in the business environment. On a personal basis, we may consider the interest rates charged by various credit cards or the best terms we can receive on a home mortgage. A business is also involved in regular financial analysis and using that analysis to make business decisions. Companies face decisions on allocating funds to invest in plant and equipment needs, new product introductions, research and design activities, staffing levels, market expansion plans, and so much more. A good understanding of financial principles is the basis for making sound decisions in any of these areas. Management is charged with the responsibility to create value for their shareholders. That value results from making good decisions on investing the firm's capital in such a way as to realize a positive return. It is also critically important that management not only understand the basic financial principles and theories but also how to apply them in the firm's day-to-day operations.

        First, read the course syllabus. Then, enroll in the course by clicking "Enroll me in this course". Click Unit 1 to read its introduction and learning outcomes. You will then see the learning materials and instructions on how to use them.

      • Unit 1: Managerial Accounting

        In this unit, we will review some basic accounting principles for preparing and reporting on the firm's financial transactions. The focus of our attention will be on the financial package, which includes the income statement, statement of retained earnings, balance sheet, and statement of cash flows. We will consider what this information tells us about the company's historical performance, its future prospects, and how the firm compares with similar firms in their industry segment.

        Completing this unit should take you approximately 18 hours.

      • Unit 2: Financial Statement Analysis

        A critical focus for a company's management is increasing their analysis of how well the business is performing in key financial areas. For this analysis to be as useful as possible, it must include more than just evaluating the current financial package. Management should compare the financial indicators over a period of time. This means past performance is used to identify positive and negative trends. You also want to compare your performance against other companies in your market. Just looking at the "raw" numbers may not give you the best picture for evaluation. That's why we will turn our discussion to calculating and using financial ratios. A ratio is simply a way to clearly show a relationship between numbers, allowing us to compare the results better.

        Completing this unit should take you approximately 5 hours.

      • Unit 3: Financial Management

        When a company is considering investing, the starting point is to list all the relevant costs it will incur and the benefits it expects to realize. For example, a service company that is considering the addition of an expensive piece of testing equipment might consider the cost to purchase the equipment, installation expense, perform routine maintenance, and procure replacement parts (cost), as well as the potential for new business, cost reductions, and improved operating efficiencies (benefits).

        Completing this unit should take you approximately 4 hours.

      • Unit 4: Risk and Return

        We are all familiar with the concept of risk and return. Even in our personal lives, we take risks knowing they can influence the return or outcome.

        • Risk: not studying for the final exam in finance.
        • Return: not getting a passing grade.

        • Risk: not buying auto insurance.
        • Return: the cost if you have an accident.

        • Risk: investing in a health club membership.
        • Return: weight loss and improved physical condition.

        The study of corporate finance is the study of business risks and returns. Whether you consider the sole proprietors who invest their money in the start-up of a business that they have long dreamed about, the individuals investing in the stock market to improve their financial position for retirement, or the institutional investors representing millions of shareholders, all face the same basic uncertainties. They will invest money today for a future return, facing the risk that it will not meet their expectations.

        Completing this unit should take you approximately 8 hours.

      • Unit 5: Managing Capital

        Investing is one decision. Where the funds will come from is another decision. You can choose to take money from two different buckets (debt or equity) or some from each. This is usually called the company's capital plan. As a business owner, you will decide how much debt and how much equity you will use to finance investments. This is the business's debt to equity ratio.

        Equity comes from the owner or owners of the business. It has the rights associated with ownership, and it is not necessary to repay it. In the financial package, you can look at the statement of retained earnings. This is the net income you decide to keep in the business for continuing operations and future investments. Retained earnings are internally generated cash because the company earned it from business operations.

        Debt is borrowed money. Again, you have some choices or financial decisions to make here. For example, do you need short-term or long-term financing? Can you sign a note, or have you established a line of credit with your local bank? Each option has advantages and disadvantages for the company.

        Completing this unit should take you approximately 5 hours.

      • Unit 6: Valuation

        In its most basic form, the value of a corporation is its book value. The balance sheet records what the company owns (assets) and what it owes (liabilities). The difference is the book value of the firm. Consider that a company has decided to close its doors. All of the assets are liquidated and turned into cash. Then, the company uses the cash to pay all its liabilities. If any money is left, it belongs to the owners as owner's equity (OE). This is fundamentally the accounting equation:

        A (assets) – L (liabilities) = OE (owner's equity)

        Completing this unit should take you approximately 4 hours.

      • Unit 7: Financial Planning and Forecasting

        The business you manage is part of a changing, dynamic environment. This environment affects the outcomes for your firm and can influence its financial performance. A good executive is aware of these factors, both external to the business and internal, and takes them into account in making financial decisions. Basic management functions include planning, organizing, leading, and control. Two of these functions are particularly important for this discussion: planning and control.

        Planning is an essential requirement that recognizes the need to do more than address the issues facing the firm in its daily operations, but what is necessary for the firm to grow and generate financial performance that is as good as, or better than, the market. Managers use control to ensure that the business and its plans meet expectations. This is a process where measurements are created, progress is monitored, and corrective actions are taken as needed.

        The firm's strategic plan contains the method for identifying these business initiatives and formalizing the goals and objectives. This is also the means for communicating this information throughout the organization.

        Completing this unit should take you approximately 11 hours.

      • Study Guide

        This study guide will help you get ready for the final exam. It discusses the key topics in each unit, walks through the learning outcomes, and lists important vocabulary. It is not meant to replace the course materials!

      • Course Feedback Survey

        Please take a few minutes to give us feedback about this course. We appreciate your feedback, whether you completed the whole course or even just a few resources. Your feedback will help us make our courses better, and we use your feedback each time we make updates to our courses.

        If you come across any urgent problems, email contact@saylor.org or post in our discussion forum.

      • Certificate Final Exam

        Take this exam if you want to earn a free Course Completion Certificate.

        To receive a free Course Completion Certificate, you will need to earn a grade of 70% or higher on this final exam. Your grade for the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again as many times as you want, with a 7-day waiting period between each attempt.

        Once you pass this final exam, you will be awarded a free Course Completion Certificate.