This course introduces the fundamental principles of financial and managerial accounting, cost accounting, managerial decision-making, interpreting financial statements and ratios, cost data, budget information. The course will conclude by introducing select topics in corporate governance and managerial economics that are relevant for decision-making. Highlights include learning:
Learning Outcomes:
The definition and measurement of assets, liabilities, owners’ equity, revenues, and expenses.
The accrual accounting process and the difference between earnings and cash flows.
The format, purpose, and preparation of the four financial statements and footnotes.
The distinction between financial and managerial accounting.
How different decisions affect cash flows, revenues, expenses, and profits.
Different types of cost that are relevant for decision-making and break-even analysis (e.g., fixed costs and variable costs, direct and allocated costs, and sunk and future costs).
The concept of the time value of money and the discounted cash flow (DCF) framework for evaluating investment projects and valuation, which entails (i) estimating expected future cash flows, and (ii) assessing risk.
The difference between diversifiable (or idiosyncratic) and non-diversifiable (or systematic) risk, and the concept of “Beta,” which is a common measure of stock price risk.
How hedging can be used to reduce exposure to risk.
How to apply the present value framework to decisions involving choices among projects, personal finance decisions, and valuing of common liabilities (e.g., mortgages and bonds).
Key principles of corporate governance and ethical decision-making.
Christopher Armstrong
Armstrong’s research primarily focuses on corporate governance, executive compensation, contracting, and incentives. He has also studied issues related to how capital market participants use accounting information and other corporate disclosures, valuation and cost of capital, and various financial reporting issues at early-stage companies.
