Instructors

Description

Overview

This course focuses on developing and applying the financial skills that are needed to successfully manage commercial and social enterprises. Students will learn how to construct a financial business plan for a startup, analyze and contrast the financial statements of existing companies, and evaluate business opportunities to optimize financial outcomes and avoid financial peril. Students will also learn about the different forms of company financing and how professional investors and lenders evaluate companies. By the end of the course students will understand how to financially position a company to maximize its potential of raising appropriate capital. The course is taught through a variety of readings, problem sets, case studies and team exercises. It is hands-on.

This course has a rigorous workload, yet is often mentioned in senior surveys as the most informative and relevant course they have taken at Tufts. This includes the numerous problem sets and Harvard Business School cases previously mentioned, as well as a capstone term project where each student will create a fully vetted financial plan for a startup or existing company. After taking the course students will gain a mastery of how to:

1. analyze the financial statements of a company
2. build pro forma financial statements for new product (or service) initiatives, department budgets within a company, or a simple business
3. quantify and apply core financial return concepts such as net present value, internal rate of return, multiple on investment, payback, ROI, leveraged versus unleveraged return, dilution, and break-even analysis to vital business applications
4. apply the financial principles to evaluate a new product or business idea, and its impact on the financial health and performance of the business
5. complete a simple valuation of a business and construct its enterprise value, market value of equity, post-money value and pre-money value

Learning Outcomes

After taking this course, it is expected that students will be able to:

1. analyze the financial statements of a company and evaluate its current financial healt as well as its future financial prosperity,
2. build a pro forma set of financial statements for a simple business, a product or service offering within a business, or an internal company division/department,
3. evaluate competing strategic opportunities by applying financial concepts including net
   present value, internal rate of return, multiple on investment, pay back, break-even analysis etc.,
4. value a simple business,
5. gain insight into how to manage business outcomes over time using the course’s “financial frameworks”,
6. develop a comprehensive financial business plan,
7. think critically and strategically.

Course Topics and Objectives

1.  deep dive into the anatomy of the four key financial statements (income statement,
   balance sheet, statement of stockholders’ equity, statement of cash flows),
2. utilizing the financial statements to assess the impact of key economic decisions and the overall financial health of a business,
3. applying managerial accounting to evaluate marginal costs, break even points, and future profits,
4. introduction to fundamental finance concepts including net present value, internal rate of return, compounding, hurdle rates, cost of capital (including equity, debt, and WACC), burn rate, payback analysis, multiple on investment, and how to measure risk, etc. 
5. quantifying and solving financial optimization problems, 
6. examination of competitive financial benchmarking, within and across industries, 
7. evaluation of management techniques to improve future financial performance and
   maximize return on capital, 
8. applying critical strategic thinking using “the financial framework” to navigate through uncertainty and optimize financial outcomes, as business leaders do
9. working through the capital raising process: valuation, securities used by startups, ownership calculations, dilution, investor requirements, strategies for raising capital,
10. a capstone project where a fully vetted financial business plan for a new business or product will be developed.