Course code: SHBI-GB 7324 B30

This core course will explain the financial language used in businesses and discuss the pros and cons of financial metrics used to evaluate the feasibility and success of businesses. The course will use real cases to explain how business strategy and its execution are reflected in financial statements. It will also teach you how to build business budgets and plans.

Help and Office


Attendance and penalty for missing classes

Requiring attendance is necessary for several reasons. First, you incorrectly assume you can catch up on a missed class by watching a recording (if available). Videos do not engage your brain as much as a live class. Second, less than 20% of you watch the recording (if available). You are then lost in class, which provides wrong signals to me as an instructor. Third, your absence hurts class discussions. Fourth, you miss out on feedback if you do not work through the questions I pose in class. Fifth, I lose the feedback since there are fewer questions.

The policy below will be in effect only after the add/drop period.

Without mandatory attendance, attendance is often below 50%. Therefore, though I dislike doing this, I penalize absences. If you anticipate being absent for good reasons, please email me well in advance. Please enter "Excused" on the attendance sheet described below to avoid the penalty if I approve. If you miss a class due to emergencies and cannot tell me in advance, do not panic. Take care of the emergency first, and then email me. I will permit you to change the "Absent" to "Excused." But, if you miss a class without a valid reason, there is a penalty, as stated below.

For sections meeting in 150-190 minute sessions, you will lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY missed session unless you were explicitly excused via email. Thus, if you miss two class sessions, you will lose two grades, and so on.

For sections meeting in 75-80 minute sessions, you will lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY TWO missed sessions unless you were explicitly excused via email. Thus, if you miss four class sessions, you will lose two grades, and so on.

Please sit in the same seat in every class and display your name tags. For Zoom classes, you must keep your video on AT ALL TIMES. You must also have a good working headset or mic, as it is extremely rude to be inaudible and force me to ask you to repeat yourself. After entering the class, please mark yourself present in the first 20 minutes on the OneDrive sheet (link posted on Brightspace). You will be marked absent if you are more than 20 minutes late unless it is because of factors beyond your control (traffic, subway, interviews running late). You will also be marked absent if you leave the class early unless you have my permission or get it afterward. You will get an F in the course if you are caught cheating on the attendance sheet.



The list of topics covered is provided below.

Session 1: Introduction to the financial statements

Financial reports

The financial reporting system

Linkages between the financial statements: Stocks versus flows

Session 2: Cash flows versus wealth flows — Revenues versus receipts

Permanent differences: Financing receipts that are never revenues

Temporary differences: Receipts that differ in timing from revenues

Session 3: Cash flows versus wealth flows — Expenses versus payments

Permanent differences: Financing payments that are never expenses

Permanent differences: Payments that differ in timing from expenses

Session 4: Size and growth — Revenue and its drivers

Fashion and tech industry revenue metrics

Growth metrics

Market share

Modeling revenues

Session 5: Margins — Expense drivers

Cost behavior

Operating expense ratios and margins

Revisiting interaction with size

Modeling expenses

Session 6: How prepayments require financing and payables mitigate the need for financing

Modeling prepayments: Operating assets

Modeling payables: Operating liabilities

Session 7: How receivables increase the need for financing and deferred revenues provide financing

Modeling receivables: Operating assets

Modeling deferred revenues: Operating liabilities

Session 8: Meeting financing needs with debt and equity

Raising debt

Raising equity

Sweat equity and incentive structures

Session 9: An integrated view — The Six Pack Framework

The six key value drivers




Net operating asset intensity

Business risk

Financial risk