This course presents an introduction to the basics of financial accounting and finance for IT professionals. The first part of the course will focus on understanding the most important financial statements, namely, the balance sheet, the income statement, and the statement of cash flows. We will then focus on how we can understand the financial health and performance of the company by examining a number of important financial ratios that are derived from the financial statements of the company. The second part of the course will focus on the basics of finance. This includes the concept of time value of money, discounting cash flows, and capital budgeting. The course will also introduce the idea of real options, how they affect a project’s NPV, and their impact of the decision to accept/reject a project. Lectures on concepts will be supplemented with numerical examples.

From the lesson

Capital Budgeting

In this series of videos, we will cover the various aspects related to deciding whether to accept or reject investment in a project. This starts off by discussing the common decision tools, namely, net present value (NPV), internal rate of return (IRR) and payback period (PBP) and how to calculate and interpret them. We will then move on to what free cash flows are and how to estimate them. Finally, we will focus on the flexibilities in projects, how to value them and how they affect the decision to accept or reject projects.