Familiarity with time value of money concepts, formulas, and spreadsheet
solution techniques should be considered a prerequisite for your MBA
experience. Because everything else in financial math is built on this
foundation of
shifting one cash payment at one time
to its equivalent at
another time, you should be clear about this before you start.
Annuities and perpetuities
are the simplest smooth patterns of cash flows over time.
Bonds
are a mixture of annuities and future values.
Net present value
allows you to convert an irregular set of cash flows back to the present to
compare one course of action with another. Such problems appear throughout the
MBA curriculum.

Time Value of Money

Annual Compounding

Present Value

Rate

Number of Periods

Future Value

SubAnnual Compounding

same as Annual plus:

Periods per Year

Annuities and Perpetuities

Bond Basics

Net Present Value
Making sense of accounting requires a clear understanding of the three main
financial statements and how these statements represent standard business
transactions. The math is simple. The challenge lies in the logic, definitions,
and conventions. Using Intel's financial statements as an example, you learn
the basics about the
balance sheet, income statement, and statement of cash
flows.
After studying each financial statement separately, you then work on the
connections among the three statements
with a set of examples.
You use the
balance sheet equation and taccounts
to characterize standard business transactions in terms of offsetting
debits and credits
. Finally, you apply what you learned with taccounts to make appropriate
journal entries.

Balance Sheet

Assets

Liabilities

Equity

Balance Sheet Equation

Transactions

Income Statement

Revenues

Expenses

Cash vs. Depreciation

Statement of Cash Flows

Operating Activities

Investing Activities

Financing Activities

Cash vs. Depreciation

T Accounts and Balance Sheet Equation

Balances

Debits

Credits

Transactions

Journals

Journal Entry Template

Debits

Credits

Transactions
Marginal analysis
addresses the question of how much to produce to maximize profit, given
specified costs and revenues. Problem statements and solutions involve either
tables or formulas. You learn to distinguish among marginal, total, and average
costs and revenues.
Supply and demand
are the classic economics concept. You learn to create and interpret the
classic linear "curves", compute the
equilibrium point
that maximizes profit and the corresponding
consumer
surplus. You examine market segmentation, and use demand curves as part
of marginal analysis.

Marginal Analysis

Tables

Formulas and Calculus

Supply and Demand
You start with
basic summary statistics, which form the
foundation. You then tackle statistics of linear combinations, which is a fancy
way of saying
stock
portfolios.
Tables and graphs summarize raw data. You need to know how to make them and
work with them.
Regression
allows you to draw a bestfit line through a set of data points. You can do it
visually or computationally. Both approaches are a snap using Excel.
The
standard normal "bell curve"
is the king of continuous distributions. You learn to work with continuous
distributions in terms of intervals rather than points. Excel makes solutions a
breeze but you may, depending on your MBA program, need to learn the ztable
approach and its corresponding pictographs and conversions.
Sampling and inference extend the normal distribution to the Central Limit
Theorem, confidence intervals, and hypothesis testing.

Basic Summary Statistics

Mean, Median, and Mode

Variance and Standard Deviation

Linear Combinations (e.g., Stock Portfolios)

Covariance and Correlation

Portfolio Statistics from Individual Stock Returns

Portfolio Statistics from Individual Stock Statistics

Discrete Probability Distributions

Linear Regression

Regression Line Equation

Prediction

Measure of Linearity

Continuous Distributions

Uniform

Standard Normal

Normal

Sampling (Central Limit Theorem)

Inference

Confidence Intervals

Hypothesis Testing