SDSU Finance 321: Principles of Finance

Finance 321, often referred to as Principles of Finance, is a foundational course required for most business majors at San Diego State University. It serves as a critical introduction to the core concepts and tools used in financial decision-making, equipping students with the essential knowledge needed for more advanced finance courses and future careers in various business fields.

The course typically covers a wide range of topics, beginning with fundamental principles such as the time value of money. Students learn how to calculate present and future values of single sums and annuities, understanding the impact of interest rates and compounding periods. This forms the basis for evaluating investment opportunities and making informed financial choices.

A significant portion of Finance 321 is dedicated to understanding financial statements. Students learn to analyze balance sheets, income statements, and statements of cash flow to assess a company’s financial health and performance. They are introduced to key financial ratios and their interpretations, allowing them to evaluate profitability, liquidity, solvency, and efficiency.

Risk and return are another core theme. The course explores different types of risk, including systematic and unsystematic risk, and their impact on investment decisions. Students are introduced to the Capital Asset Pricing Model (CAPM) and its application in determining the required rate of return for an investment, given its level of risk.

Valuation techniques are also a key component. Students learn to value stocks and bonds using various methods, including discounted cash flow analysis and relative valuation. They explore different factors that influence asset prices, such as interest rate movements, inflation, and economic growth.

Working capital management is also discussed, focusing on the efficient management of current assets and liabilities to ensure smooth business operations. Topics may include cash management, inventory control, and accounts receivable and payable management.

Beyond the theoretical concepts, Finance 321 emphasizes the application of these principles through problem-solving and case studies. Students are often required to work on assignments and projects that involve analyzing real-world financial data and making investment recommendations. This hands-on experience helps them develop critical thinking and analytical skills.

Success in Finance 321 requires a strong foundation in mathematics and a willingness to engage with complex financial concepts. Students are expected to attend lectures regularly, participate in class discussions, and complete assigned readings and exercises. A solid understanding of Finance 321 provides a crucial stepping stone for students pursuing careers in finance, accounting, management, and other business-related fields. It lays the groundwork for understanding more specialized areas such as investment management, corporate finance, and financial institutions.