Principles of Finance and Accounting for Science and Technology Management (Fall and Spring)
The course provides students with a practical, working knowledge of the tools and language of finance in general and as they pertain to the management of science and technology in particular.
The course emphasizes the use, and limitations, of financial tools in making business decisions including capital expansion, funding R&D, and managing working capital. Principles are presented heuristically; financial theory presented as a foundation only as necessary. Case studies and examples provide students with hands on practice in the application to business problems of the principles discussed.
By the end of the course, students will be able to prepare and communicate the financial part of the business plan developed in the Capstone course and participate proactively in financial and funding decisions at work whether it be at an established company, an R&D driven start-up or in an academic setting.
The course is divided into three modules.
- Module I – Financial Decision Making and Program/Project Funding Decisions focuses on the use and limitations of two key financial metrics – net present value and internal rate of return – to support investment decisions. Forecasting, development of alternatives, and risk assessment are covered as an integral part of the investment decision making process.
- Module II – Accounting the Language of Finance provides students with the ability to understand the three most important financial statements: income statement, balance sheet, and sources and uses of funds statement. Students learn how the financial statements reflect and are driven by business operations. Module II also discusses the Capital Asset Pricing Model and stock market valuation of publicly traded companies.
- Module III – The Start-Up focuses on issues unique to early-stage research-intensive companies. The issues include projection of operating cash flows, valuation, financing requirements, exit, and raising money from investors.
Lectures, readings, case studies, and hands-on computer modeling will be used throughout the course. Computer modeling will illustrate the financial concepts and enable students to improve their ability to use Excel for financial modeling and data analysis.
Homework will be assigned for each session. Articles and case studies supplement the material discussed in class. Analytical assignments, all in Excel, provide opportunities to apply the material covered in class and to strengthen Excel skills. Analytical assignments must be sent to the course professor prior to the beginning of the following session.
The mid-term and final exams test the students understanding of the concepts, their application, and limitations. All exam questions are in Excel. Exams are open-book.The mid-term occurs at class session 6; the final at class session 15.
Students will work in teams to analyze and present the financial statements of publicly traded companies in an industry of the team’s choosing. The analysis also includes relative valuations of the selected companies. Company analysis enables the students to utilize the concepts discussed in Module 2. Students also gain familiarity with company financial documents including, most importantly 10Ks. Team members share the team grade.