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Oklahoma State University
department of finance

Spears School of Business at Oklahoma State University

Prerequisite Skills Needed for Finance 3113

Core Beliefs

The faculty members teaching Finance 3113 assume that the students enrolled in Finance 3113 understand material and ideas from the prerequisite courses for Finance 3113 and the students enrolled in Finance 3113 will be able to apply the knowledge and skills developed in those classes.

Accounting, Math and Statistics Knowledge and Skills

Faculty teaching Finance 3113 expect students in the class to possess knowledge and skills in the areas of math, statistics and accounting.

  1. You should possess and apply fundamental knowledge of math skills. Your instructor for Finance 3113 assumes you are able to understand:
    1. Operations inside parentheses.
    2. Exponentiation and logarithms.
    3. The difference between percent, proportion, and ratio.
    4. How to solve an equation with one unknown.
    5. How to convert percentages to decimals and how to convert decimals to percentages.

    and that you will be able to calculate:

    1. A percentage, a proportion, and a ratio.
    2. A mean, equally or unequally weighted.
    3. A median.
    4. A variance and standard deviation.
    5. A correlation and covariance.
  2. You should possess and apply fundamental knowledge of probability and statistics. Your instructor for Finance 3113 assumes you are able to understand:
    1. Continuous and discrete random variables and their probability distributions.
    2. The difference between subjective and objective probabilities.
    3. How to draw inferences using probabilities and statistics.
    4. The difference between a mean (equally and unequally weighted), a median and a mode.
    5. Variance (standard deviation) as a measure of uncertainty.
    6. The basics of linear regression analysis (Ordinary Least Squares – OLS) and the interpretation of linear regression analysis (OLS) including an understanding of slope coefficients.
    7. The difference between dependent and independent variables.
  3. You should possess and apply fundamental knowledge of accounting. Your instructor for Finance 3113 assumes you are able to understand:
    1. How to construct:
      1. A balance sheet
      2. An income statement
      3. A statement of cash flows
    2. Key terms and concepts, for example: EBITDA, EBIT, EBT, FIFO-LIFO, etc.
    3. Depreciation, for example: assets that are and are not depreciable, depreciable basis, accelerated vs. straight line depreciation, etc.
    4. Working capital and net working capital.
    5. The difference between cash flow and earnings.
    6. The difference between aggressive and conservative accounting principles.
    7. The difference between accounting for reporting and accounting for tax purposes.