Finance 125 at Lehigh University: An Overview
Finance 125, “Introduction to Financial Management,” is a cornerstone course for undergraduate students at Lehigh University’s College of Business. Typically taken by sophomores and juniors, it provides a foundational understanding of core financial concepts and analytical techniques essential for success in various finance-related careers. The course serves as a gateway to more advanced finance electives and equips students with the knowledge to make informed financial decisions in both their personal and professional lives.
The curriculum typically covers a wide range of topics. Students are introduced to the time value of money, a fundamental principle underpinning investment decisions. This includes calculating present and future values, understanding the impact of compounding, and applying these concepts to different financial instruments. Another key area is financial statement analysis. Students learn to interpret balance sheets, income statements, and statements of cash flows to assess a company’s financial health and performance. This analysis forms the basis for evaluating investment opportunities and making credit decisions.
Furthermore, Finance 125 delves into the valuation of stocks and bonds. Students explore various valuation models, including discounted cash flow analysis, and learn to estimate intrinsic values based on a company’s expected future earnings and risk profile. Understanding the risk-return tradeoff is emphasized, enabling students to assess the potential rewards of different investments relative to their associated risks. Capital budgeting techniques, such as net present value (NPV) and internal rate of return (IRR), are also covered. These methods provide a framework for evaluating investment projects and determining which projects will generate the most value for a company.
Beyond theoretical concepts, the course often incorporates practical applications. Students may work on case studies that simulate real-world financial scenarios, requiring them to apply the tools and techniques learned in class to solve complex problems. Spreadsheet modeling is often integrated into the curriculum, enabling students to build financial models and perform sensitivity analyses. Guest speakers from the finance industry may also be invited to share their experiences and provide insights into current market trends.
Successful completion of Finance 125 requires a solid understanding of basic accounting principles and a willingness to engage with quantitative concepts. The course prepares students for internships and entry-level positions in various areas of finance, including investment banking, corporate finance, wealth management, and financial analysis. More importantly, it gives them the knowledge and skills to become financially literate individuals capable of making sound financial decisions throughout their lives. The skills acquired in Finance 125 are not just beneficial for finance majors; students in other business disciplines, such as marketing and management, will also find them valuable for understanding the financial implications of their decisions.