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Principles of Finance (College Prep)

Make it rain.

  • Course Length: 6 weeks
  • Course Type: Basic
  • Category:
    • Business and Career Preparation
    • College Prep
    • Life Skills

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This college-level course is all about how to become an investment banker. Or an investor. Or uh, someone who knows what a stock is. It's about wealth, retirement excess, and how to read The Wall Street Journal and actually understand what it means.

Why are Disney's shares worth a bajillion dollars? (Roughly speaking, of course.) Why does GOOG trade for thousands a share? Why do some bonds yield 3% and others yield 10%? And what is a bond anyway. What's its math? How does it... work?

We'll cover the operations of companies from a financial perspective—how to wring more blood from that corporate turnip. We delve into the basics of accounting as well. Don't know what margin is? Nope, not the thing you spread on toast. Profit margin: The pennies you keep per dollar of sales you make. There's gross profit, operating profit, and net profit—all different flavors of net from that dollar of revenue.

For the really adventurous, we cover derivatives in G-rated depth as well. Call options. Put options. Warrants. And a few Greeks.

If you survive this course, you'll be well equipped for that first interview with Goldman Slacks, maker of the finest men's dress slacks in southwest Florida. For the other employer—the one on Wall Street—we'll get you started, but you'll have a bit more learning to do still.

Unit Breakdown

1 Principles of Finance (College Prep) - Company Formation, Structure, and Inception

The products companies create are a direct reflection of the people who run them. (So as you can imagine, the people who run Shmoop are brilliant goofballs.) That's why this course kicks off with the elusive people who structure a company—financial managers, investment bankers, and fundraisers, for starters. Before you dive in, we'll also have you take a peek through our finance guides and glossary to be sure you're picking up what we're putting down throughout the course.

2 Principles of Finance (College Prep) - The Financial Markets

While we know the idea of a "market" may evoke images of locally sourced kale or creep-tastic flea market finds, the finance world's fair markets bring together lots of buyers and sellers—and not of the "farmers' market" variety. In this unit, we'll review the many types of fair markets—stocks, bonds, and commodities; private and public—and all the good stuff, like interest and investment, that comes with them. Kale and creepy dolls not invited.

3 Principles of Finance (College Prep) - Accounting: Income Statements, Cash Flow Statements, Balance Sheets

Accounting is a tool that lets evaluators of companies compare progress and tackle the oh-so-important task of paying taxes. H&R Block can eat our dust—we're in the big leagues now.

4 Principles of Finance (College Prep) - Calculations, Ratios, Assessments, and Metrics

Unit 4 discusses what metrics financial managers should use to assess their work. (And no, the metric is not "do I have enough dollar bills to take a bath in?") Metrics can be used to measure money owed, if enough money is saved, and how efficiently an organization is running—all crucial tools to successful financial management. Well, that and diving into currency-filled tubs.

5 Principles of Finance (College Prep) - Bonds and the Time Value of Money

Bonds are a promise—the promise of potential equity backed by assets and cash flow. It's usually understood that if a bond's promise is broken, the lender takes possession of the asset for which it loaned the money in the first place. By the end of Unit 5, we'll make sure you can lend money and invest in bonds without losing money and having a scary dude come after you trying to break your legs. And that's a Shmoop guarantee.

6 Principles of Finance (College Prep) - Stocks in the Box

Risk and reward can be mapped mathematically—and they should be, if you're interested in structures, wins, losses, and sweet spreadsheets. While having equity in a Silicon Valley startup is a trending way to enter the financial game, sometimes you gotta play the stock market in a tried-and-true fashion for maximum return. Enter: Unit 6, a large pile of investable cash, and a healthy appetite for risk.

7 Principles of Finance (College Prep) - Capital Budgeting

The key phrases in Unit 7 are discounted cash flow and net present value. To understand 'em, you have to be able to calculate risk and what your stock would be worth in year n—or the likelihood that you can pay back $37 million worth of 6% debt when the principal comes due. Uh, yeah…that's not the sort of thing you can quickly determine with a retro Texas Instruments graphing calculator. 

8 Principles of Finance (College Prep) - Leveraged Buyout: The Revenge of Debt

If you want to go into financial management, we're assuming you want to make money. Similarly, if you're a shareholder in a company, we're guessing you want the company to make money. Our favorite way to make everyone huge profits? You guessed it: old-fashioned spreadsheets.

9 Principles of Finance (College Prep) - Ethical Conundrums in Business

Ethics. Shmethics? Not so much. It's called "jail" if you step out of bonds. Ask Bernie how the hot cocoa market is going in prison there. Ethics in finance should be oh so easy. There's a ton of money to go around: if you are even modestly talented in this world, you'll make serious bank; and the railroad tracks set to guide you are crystal clear. They revolve around one basic idea: put your client's interests first. If you generally just do that one little thing, the world can be your oyster. Big fat pearls in them oysters.