Pre-MBA Quantitative Skills: Finance

Rice University via Coursera

Go to Course: https://www.coursera.org/learn/pre-mba-quant-skills-finance

Introduction

### Course Review and Recommendation: Pre-MBA Quantitative Skills: Finance on Coursera As a prospective MBA student, or perhaps someone in the early stages of your finance career, you may find yourself in need of a solid foundation in quantitative finance principles. The **Pre-MBA Quantitative Skills: Finance** course on Coursera steps in to bridge this gap by offering an insightful, high-level overview of key topics often covered in a traditional MBA finance curriculum. #### Course Overview This course is designed with the intent to provide a roadmap for how financial professionals make decisions. Over four weeks, participants will explore fundamental concepts such as financial valuation, time value of money, and discounted cash flow (DCF) valuation among others. The content is structured not just to teach the basics, but to foster a conceptual understanding that can be applied practically in real-world scenarios. #### Syllabus Breakdown 1. **Course Overview and Basic Principles of Financial Valuation & Discounting** - The first week sets the stage with an introduction to financial valuation. Here, students learn the essentials of compounding and discounting rates of return over time. This module effectively utilizes practical examples to illustrate the application of discounted cash flow methods as compared to other valuation techniques. 2. **How to Spend Money (Capital Budgeting Tools)** - Building on foundational principles, the second week delves into capital budgeting. Students gain insights into important tools like Net Present Value (NPV), Internal Rate of Return (IRR), Payback period, and Return on Capital. This portion of the course highlights the advantages of each tool and introduces concepts of sensitivity analysis and spreadsheet modeling—skills that are invaluable for financial decision-making. 3. **Measuring Cash Creation and Flow** - During the third week, learners undertake a comprehensive review of financial statements to uncover cash sources and uses. This module emphasizes Free Cash Flow—the cornerstone of financial performance and valuation—and provides a methodological approach to forecasting cash creation within organizations. 4. **Evaluating the Cost of Capital** - The final week steps into the capital markets territory, focusing on the trade-off between risk and return. Students learn to measure risk, apply risk premiums, and calculate a firm's cost of capital. This module beautifully ties back to previous lessons on free cash flow and capital budgeting, culminating in a holistic understanding of financial valuation. 5. **Capstone Case: Sunrise Bakery** - The course concludes with a realistic case study, where students apply their knowledge to evaluate the investment prospects of a hypothetical company, Sunrise Bakery. This capstone project is the perfect opportunity to integrate all acquired skills and concepts as students forecast cash generation, assess financial health, and make informed recommendations on capital expenditures. #### My Experience and Recommendation Having completed this course, I can attest to its effectiveness in demystifying complex financial concepts. The intuitive approach used throughout the course enhances comprehension, making it suitable for both newcomers and those seeking to refresh their skills before entering an MBA program. The instructors present the material engagingly, combining theory with applicable scenarios that make learning both enjoyable and practical. If you are considering this course, I highly recommend it for anyone who wants to think strategically about finance before diving into an intensive MBA program. The analytical skills and foundational knowledge gained from this course can significantly boost your confidence in financial discussions and analyses, paving the way for success in both academic and professional environments. #### Conclusion In summary, **Pre-MBA Quantitative Skills: Finance** on Coursera is a well-structured, insightful course that equips students with a conceptual toolkit for understanding and navigating the financial decision-making processes of businesses. Whether you are preparing for an MBA or looking to strengthen your finance acumen, this course is a worthwhile investment in your education.

Syllabus

Course Overview and Basic Principles of Financial Valuation Discounting

Welcome Pre-MBA Quant: Finance! In this section you will find general information about the course and instructions on how to navigate the course. For the first week of lectures, we will be covering the basics of financial valuation. We will start with the basics of compounding and discounting rates of return over time. Using these tools we will then move on to valuation using the discounted cash flow method. Along the way, we will demonstrate our valuation tools with a variety of practical examples and compare our analysis with other valuation techniques.

How to Spend Money (Capital Budgeting tools)

In this week of the course, we will build on the basic valuation tools from week one to start making capital budgeting decisions. Our capital budgeting review covers the basic tools like Net Present Value, Internal Rate of Return, Payback period, and return on capital. Our discussion of the relative advantages of each different tool leads us into sensitivity analysis and the advantages of spreadsheet modeling.

Measuring Cash Creation and Flow

In our third week together, we will go on a treasure hunt through the financial statements. Using discounted cash flows as our motivation, we search through the income statement and balance sheet for all the uses and sources of cash. Our search leads us to our primary measure of value creation: Free Cash Flow. Free cash flow will form the basis of most financial analysis and this module gives us a roadmap for estimating and forecasting cash creation within any organization.

How Much Does Money Cost? Evaluating the Cost of Capital

Welcome back everyone! In our final week together in this course, we switch gears and take an external view of the firm from a Wall Street, or capital markets, perspective. We think about the basic tradeoff between risk and return, how to measure risk, and how to put a risk premium on different kinds of investments. We then take our analysis of risk and return and use it to estimate a firm's cost of capital. Finally, we circle back to free cash flows, capital budgeting and valuation to tie together all four weeks and get ready for our capstone case analysis.

Capstone Case: Putting it All Back Together from Main Street to Wall Street

In this final part of the course we bring all of our analysis to bear on a realistic case study. We will evaluate the investment prospects of Sunrise Bakery. As their CFO considers a large capital expenditure, she needs to think about the tradeoff between spending money today and generating more free cash flow in the future. Our job in this case is to forecast the amount of cash generation the new equipment will produce, discount the cash flows, and use all of our capital budgeting tools to make a sound financial recommendation.