Regardless of your major, you’ll be spending the rest of your life in the

“world of finance.” In the business world, deciding to develop a new product line, build a new plant, open a new store, or figuring out how to raise money to finance all this, you are facing finance questions. In fact, most decision making actually boils down to a finance question: what is its value? If you can determine the value of the introduction of a new product, or the decision to build a new hotel resort, you can make a better decision. If it is worth more in today’s dollars than it costs, go ahead with it, otherwise don’t do it. Also, if you can value a stock or a bond, you can decide whether or not to buy it—if it is worth more than it costs, buy it; otherwise don’t. Valuation is what we do in this class—we value real assets like Disney’s decision to build Disney Shanghai. We also learn how to value financial assets like stocks and bonds.

Let’s say you end up deciding not to go into business and end up teaching high school, you’ll also find yourself in the world of finance. That’s because you might want to buy a house or a vacation home or save for your children’s education (or deal with your own student loans). Even if you don’t do those things, you’ll certainly want to save for retirement—

and without an understanding of the basics of finance you’ll have a tough time. Because, after all, if you don’t know how the world of finance works, you’ll find it tough to be successful in it and it is all around you.

In addition to gaining the skills necessary to succeed in the “world of finance” you’ll also gain skills that will help you succeed in your career.

Some of those skills you’ll develop are highlighted below.
Critical Thinking Skills – This text begins with the presentation of five foundational principles of finance which are the threads that bind all the topics of the book. Then throughout the book, these five foundational principles are revisited in “Remember Your Principles” boxes. These five principles of finance allow us to tie the material together, and as a result demonstrate the common root of the disciple of financial theory and financial practice. The end result is an introductory treatment of a discipline rather than the treatment of a series of isolated financial problems that managers encounter. These principles will allow you to learn more than simply how to calculate the correct answers to problems.
They will allow you to understand why problems are approached in different ways and how to critically interpret problems, design solutions, and analyze and evaluate their solutions. In effect, you’ll not only learn the tools of analysis, but more importantly you’ll develop an intuitive understanding of why the problem is approached as it is, and what is actually being done in the analysis. And as you’ll see, much of what is being done deals with valuation. To value assets, forecast the future, and discount those cash flows, many assumptions must be made about specific variables. This approach of the logic and fundamental principles that drive the field of finance, allows students to develop their critical thinking skills and effectively deal with financial along with other business problems in an ever-changing business and financial environment.
Excel Skills – Today, Excel is the primary spreadsheet analysis and modeling tool used in business, and a basic competence in Excel will go a long way toward a successful business career. The power to import data from various files and documents makes Excel the perfect tool for business analysis. Although not everyone in business has to create Excel models, everyone in business has to understand them and understand how the data that they are using to make their decisions is generated.
You’ll need to understand how to communicate with programmers and how to interpret their results. You’ll find that being fluent in the “language of Excel” will not only make you look more knowledgeable, but will actually help you make decisions in your job.
Data Analysis Skills – Finance deals with decision making within the firm – when to introduce a new product, make an investment, or how to value a financial asset like a bond or a share of common stock. Gaining an understanding of the decision-making process and acquiring the analytical tool set necessary to make those decisions reflects the core of finance and this text. With those skills and understanding you should be able to anticipate decisions before they are made.
Collaboration and Communication Skills – Developing an understanding of the tools and techniques used in finance along with an understanding of Excel and how financial models are developed will allow you to talk the talk of finance. Just being able to communicate with those in finance and other areas will go a long way toward helping you develop the collaborative skills to be successful in business. Most decisions involve input from several areas within business, and if you can’t communicate, you won’t be able to do your job effectively.

Concept Check 1. What has brought on the era of the multinational corporation?
2. Has looking beyond U.S. borders been a profitable experience for U.S. corporations?