BUS202: Principles of Finance | Saylor Academy (2024)

In BUS103: Financial Accounting, we learned that firms must keep detailed financial records so that they can distribute organized reports to managers, shareholders, and government regulators. This course will focus on what managers, investors, and government agencies do with this information. This introductory course serves several fields of finance and is comparable in content to courses that other institutions might call "corporate finance" or "financial management".

Finance is a broad term; you will find that both managers who compile the financial reports we discussed in financial accounting and stockbrokers working on Wall Street will claim that they "work in finance". So, what exactly is finance? Finance is the management of a company's money and scarce resources. It is distinct from accounting; while accounting aims to organize and compile past information, finance is geared toward deciding what to do with it.

You will be exposed to many different sub-fields within finance in this course. You will learn how to determine which projects have the best potential payoff and how to manage investments and value stocks. All finance boils down to one concept: return. In essence, finance asks: "If I give you money today, how much money will I get back in the future?" Though the answer to this question will vary widely from case to case, you will know how to find the answer by the time you finish this course.

You will learn to use financial concepts such as the time value of money, pro forma financial statements, financial ratio analysis, capital budgeting analysis, capital structure, and the cost of capital. This course will also provide an introduction to bonds and stocks. When you finish this course, you will understand financial statements, cash flow, time value of money, stocks and bonds, capital budgeting, ratio analysis, and long-term financing, and how to apply these concepts and skills to business decisions.

Finance is a broad subject, and financial decisions are all around us. Whether you work on Wall Street or in a small company, finance is vital to every business. Therefore, understanding the fundamentals of finance is essential to your business education. In this unit, you will learn about the goal of financial managers, which is to maximize the wealth of shareholders, and why that is important. You will also learn the differences between the types of business organizations that operate in the United States and their advantages and disadvantages. This unit also explains how the financial markets in our country work and the general terminology used throughout the field. Ethical issues that affect the field of finance are also reviewed in this section. Understanding where ethical dilemmas might arise in the workplace is vital for all employees who may be affected by the decisions they, or their management, make.

Completing this unit will take approximately 6 hours.

You learned about financial statements in BUS103. This course will go beyond what you learned there to understand how managers use financial statements to make decisions. Some of this material should be a review from your earlier course. Financial statements are how a company translates what it does – such as things it sells or payments it makes – into a standardized format that many different stakeholders use to assess their financial condition. These stakeholders include managers, employees, investors, regulators, and others. You need to understand the basics of financial statements to assess the health of your own company or one that you are thinking about working for or investing in. If accounting is the "language of business", financial statements are the books that put that language on paper for all to see.

Completing this unit should take you approximately 16 hours.

Working capital management explains how companies manage their day-to-day financial decisions. Effective management of current assets and current liabilities is crucial to make sure companies have enough cash flow to meet their regular obligations and maximize their financial return. The four main focus areas in working capital management are cash, accounts receivable, inventory, and accounts payable. Companies try to find the most effective use of assets and liabilities while balancing the trade-off between liquidity and profitability.

Completing this unit should take you approximately 6 hours.

Suppose you have the option of receiving $100 today or $200 in five years. Which option would you choose? How would you determine which is the better deal? Some of us would rather have less money today vs. wait for more money tomorrow. However, sometimes it pays to wait. Unit 4 introduces the concept of the time value of money and explains how to determine the value of money today versus tomorrow by using finance tools to assess present and future values.

Completing this unit should take you approximately 7 hours.

This unit is designed to help you understand stocks, bonds, and the financial markets they are traded in. You've heard the terms "stocks and bonds" often, but do you really understand the difference? Understanding these important financial instruments can help you professionally and personally as you navigate the choices for your retirement savings accounts and other financial decisions. Stocks and bonds are an important source of capital for businesses to fund new equipment and new projects. For individuals, they present opportunities for their savings to grow over time. Financial markets bring together these investors and corporations so that each can achieve these objectives efficiently and transparently.

Completing this unit should take you approximately 11 hours.

This unit demonstrates how a financial manager uses financial tools to make capital investment decisions. It addresses the concept of capital budgeting and how to evaluate investment projects using the net present value calculations, internal rate of return criteria, profitability index, and the payback period method. In particular, this unit will teach you how to determine which cash flows are relevant (should be considered) when making an investment decision. For instance, suppose you have been asked to give your recommendation about buying or not buying a new building. As the financial manager, it is your task to identify cash flows that, in some way or another, affect the value of the investment (in this case, the building) and calculate whether the money spent on the project upfront is more or less than the value received. Also, this unit explains how to calculate "incremental" cash flows when evaluating a new project, which can also be considered the difference in future cash flows under two scenarios when a new investment project is being considered.

Completing this unit should take you approximately 6 hours.

This unit explains the relationship between risk and return. Every investment decision carries a certain amount of risk. Therefore, the role of the financial manager is to understand how to calculate the "riskiness" of an investment versus its reward so that they can make sound financial and business decisions. For example, suppose you are the financial manager for a large corporation, and your boss has asked you to choose between two investment proposals. Investment A is a textile plant in a remote part of a developing country. This plant can generate $50 million in yearly profits. Investment B is a textile plant located in the United States, near a small Virginia town with a rich textile industry tradition. However, investment B's capacity for profits is only $30 million due to higher start-up and operating costs. You are the financial manager. Which option do you choose? While investment A can yield significantly higher profits, there is a great deal of risk that you must consider. Investment B has a much lower profit capacity, but the risk is also lower. This unit explains the relationship between risk and return, and you will learn how to compute the level of risk by calculating expected values and the standard deviation. You will also learn about handling risk in a portfolio with different investments and how to measure a stock investment's expected performance when it is being affected by the overall performance of a stock market.

Completing this unit should take you approximately 6 hours.

Does it matter whether a company's assets are financed with 50% from a bank loan and 50% from investors' money? Does that form of capital structure, where 50% of assets come from debt and 50% from equity, influence how a company succeeds in business? This unit addresses these questions by focusing on the theory of capital structure. Specifically, this unit explains the concept of capital structure and introduces the most common formula used when comparing a company's return to the cost of capital: the weighted average cost of capital (WACC). We will also explore how tax policy affects a company's true cost of capital.

Completing this unit should take you approximately 5 hours.

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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.

Take this exam if you want to earn college credit for this course. This course is eligible for college credit through Saylor Academy's Saylor Direct Credit Program.

The Saylor Direct Credit Final Exam requires a proctoring fee of $5. To pass this course and earn a Credly Badge and official transcript, you will need to earn a grade of 70% or higher on the Saylor Direct Credit Final Exam. Your grade for this 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 a maximum of 3 times, with a 14-day waiting period between each attempt.

We are partnering with SmarterProctoring to help make the proctoring fee more affordable. We will be recording you, your screen, and the audio in your room during the exam. This is an automated proctoring service, but no decisions are automated; recordings are only viewed by our staff with the purpose of making sure it is you taking the exam and verifying any questions about exam integrity. We understand that there are challenges with learning at home - we won't invalidate your exam just because your child ran into the room!

Requirements:

1. Desktop Computer
   
2. Chrome (v74+)
   
3. Webcam + Microphone
4. 1mbps+ Internet Connection
   

Once you pass this final exam, you will be awarded a Credly Badge and can request an official transcript.