Finance 361: Introduction to Financial Management
Finance 361 at the University of Nebraska-Lincoln (UNL), formally titled “Introduction to Financial Management,” serves as a foundational course for students pursuing careers in finance and related fields. It provides a comprehensive overview of core financial principles and tools essential for effective decision-making in a business context. This course is typically a prerequisite for more advanced finance electives, setting the stage for specialized knowledge acquisition.
Core Concepts Covered
The curriculum broadly covers several key areas:
- Financial Statement Analysis: Students learn to interpret and analyze financial statements (balance sheets, income statements, statements of cash flow) to assess a company’s financial health and performance. Ratio analysis and trend analysis are crucial components.
- Time Value of Money: A cornerstone of finance, this concept emphasizes the importance of considering the timing of cash flows. Students master calculations involving present value, future value, annuities, and perpetuities, which are fundamental for investment decisions.
- Risk and Return: Understanding the relationship between risk and return is critical. The course covers methods for measuring risk, diversification strategies, and the Capital Asset Pricing Model (CAPM) to determine expected returns.
- Capital Budgeting: This section focuses on evaluating investment projects using techniques like Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. Students learn how to make informed decisions about which projects to undertake to maximize shareholder wealth.
- Cost of Capital: Determining the cost of a company’s funds (debt, equity) is crucial for investment decisions. The course covers methods for calculating the weighted average cost of capital (WACC).
- Working Capital Management: Managing a company’s short-term assets and liabilities efficiently is vital for liquidity and profitability. Students learn about managing cash, inventory, and accounts receivable/payable.
Learning Outcomes
Upon successful completion of Finance 361, students are expected to be able to:
- Analyze and interpret financial statements to assess a firm’s financial performance.
- Apply time value of money concepts to evaluate investment opportunities.
- Understand the relationship between risk and return and apply portfolio management principles.
- Evaluate capital budgeting projects using various decision-making criteria.
- Calculate the cost of capital and understand its importance in investment decisions.
- Effectively manage working capital to optimize liquidity and profitability.
Course Structure and Assessment
The course typically involves a combination of lectures, problem-solving sessions, case studies, and group projects. Assessment methods usually include:
- Exams (covering theoretical concepts and problem-solving)
- Homework assignments (to reinforce learning and develop problem-solving skills)
- Quizzes (to assess understanding of key concepts)
- Case studies (to apply theoretical knowledge to real-world scenarios)
- Group projects (to foster teamwork and analytical skills)
Significance
Finance 361 is a crucial stepping stone for students seeking careers in investment banking, corporate finance, financial analysis, portfolio management, and other finance-related areas. The knowledge and skills gained in this course provide a strong foundation for success in the financial industry and further academic pursuits.