Finance Fundamentals: Real World Applications & Case Studies

Explore microeconomics concepts such as scarcity, opportunity cost, supply and demand, profit maximization, and price elasticity, then apply these ideas to make informed daily and business decisions.

Explore microeconomics by examining how scarcity drives choices and opportunity costs, and how supply, demand, and the invisible hand determine price in real markets.

Explore opportunity cost on a production possibilities frontier, comparing corn and soybean options, and show that 3000 corn and 8000 soybean yields 47,000 revenue.

Explore the profit equation profit equals revenue minus cost and distinguish fixed costs (rent, utilities, insurance) from variable costs (seeds, fertilizer, water, labor) using Farmer Ali's case.

Analyze fixed and variable costs to maximize Farmer Ali's profit. Option A yields the highest profit due to lowest variable costs and economies of scale.

Evaluate whether buying new land to raise corn production from 8000 to 9000 is profitable by analyzing fixed costs, variable costs, and marginal cost.

Explore supply and demand curves in microeconomics, showing how price changes affect quantity demanded and supplied, and how they determine the optimum price at market equilibrium.

Explore how to draw a demand curve and identify the profit-maximizing price for a coffee shop. By comparing profits at $20, $15, $10, and $5, the optimal price is $15.

Explore how demand equals supply creates market equilibrium and how price changes trigger a new equilibrium, illustrated by Covid-19 face masks.

Explore how demand and supply shifts, guided by the invisible hand, create market equilibrium and changing price and quantity, illustrated by smartphones in the early 2000s and gasoline crises.

Explore price elasticity of demand with real-world examples, distinguishing elastic and inelastic responses, and calculating elasticity from price changes and real-life cases like Giffen goods.

Explore how scarcity and trade-offs drive decision making, define opportunity cost and profit maximization, and analyze supply and demand, equilibrium, invisible hand, and price elasticity in real markets.

Explore macroeconomics fundamentals, including GDP, unemployment, inflation, growth, economic cycles, and monetary policies, to build a foundation for informed financial decisions.

Explore macroeconomics by tracing the economy's expansion and recession, aggregate demand and supply, GDP, inflation, and the circular flow between households and firms.

Explore GDP as the total value of goods and services and measure it with the income and expenditure approaches, including consumption, government purchases, and net exports.

Compute ABC's GDP via the expenditure approach, detailing consumer spending on durable goods and services, plus investments, government spending, and net exports, totaling 20 trillion with -0.6 net exports.

Explore how interest rates influence inflation and unemployment, and how central banks like the Federal Reserve use rates to steer demand, employment, and prices, revealing the Phillips curve.

Explore how central banks use interest rate changes to manage inflation and unemployment within economic cycles. The exercise highlights balancing actions and policy tools to stabilize growth.

Explore key macroeconomic indicators such as GDP, interest rates, unemployment, stock prices, and CPI. Learn how changes signal economic expansion and inflation.

Calculate inflation with a CPI basket of goods, using items like bread, milk, eggs, gasoline, and tickets to show a 6.3% rise from 2022 to 2023, affecting purchasing power.

Explore macroeconomics through GDP and the expenditure methodology, inflation, and unemployment, and learn how central banks use interest rates and monetary tools to steer recovery and cycles.

Explore how financial statements reveal a company's financial health by analyzing income statements, balance sheets, and key metrics with real-life examples.

Dissect the difference between accounting and finance, define their roles, and explain two key financial statements: income statement and balance sheet, revealing past performance and current financial health.

Understand how an income statement tracks revenue, cost of goods sold, gross margin, operating expenses, EBITDA, and net income through Tony's three months example and a pen company.

Compare two companies to assess operational efficiency using ebitda, revenue, costs, depreciation, interest, and tax differences across countries.

Learn to interpret Apple's quarterly income statement, analyzing revenue by product and services, costs, operating expenses, and net income, with year-over-year and regional insights.

Understand how a balance sheet captures what a company owns and owes at a specific date, showing assets, liabilities, and equity balanced as assets equal liabilities plus equity.

Interpret Apple's balance sheet by comparing dates and distinguishing current and non-current assets and liabilities. Compare cash, marketable securities, receivables, and inventories to reveal the health and equity dynamics.

Understand why assets equal liabilities plus equity by analyzing transactions like paying debt, selling assets, issuing stock, and retaining earnings, while following the story behind each change.

Learn to connect the income statement and balance sheet by using two balance sheets to compute net income from changes in retained earnings, accounting for dividends.

Explore income statements and balance sheets through a real-world Apple example, analyzing revenue trends, gross margins, EBIT and EBITDA, cash flow, and key ratios to interpret financial health.

Explore key financial ratios—liquidity, profitability, efficiency, and solvency—and learn the logic to interpret them using insights from income statements and balance sheets for everyday financial decisions.

Explore financial ratios to assess a company's health and performance, including liquidity, solvency, profitability, efficiency, market valuation, and growth, using balance sheet and income statement data.

Assess a company's liquidity by applying current and quick ratios that compare assets to current liabilities, noting inventory exclusion for the quick ratio, with higher ratios indicating stronger liquidity.

Assess solvency ratios, including debt-to-equity and interest coverage, to evaluate long-term sustainability by analyzing debt levels, equity, EBIT, and interest expense.

Explore profitability ratios such as gross profit margin, net profit margin, return on assets, and return on equity, and learn how to interpret them using income statements and balance sheets.

Explore efficiency ratios that show how revenue compares to total assets and how cost of goods sold over average inventory reveals inventory turnover.

Examine key valuation ratios, such as price-to-earnings and price-to-book, that show market expectations for growth by linking market price per share with earnings or book value per share.

Compare stocks and bonds by defining ownership shares and debt instruments, examining dividends, capital appreciation, interest, price movements, and risk using examples like Apple, Microsoft, Nvidia, and US Treasuries.

Compare three companies using liquidity, solvency, profitability, efficiency, and valuation ratios to interpret current and quick ratios, margins, ROA/ROE, and PE/PEG metrics.

Analyze company performance using price-to-earnings ratio, peg ratio, and roe, gross profit margin, and net profit margin to rank a, b, and c and judge investment potential.

Explore how key financial ratios reveal profitability, valuation, solvency, and liquidity. Learn how return on equity, pe and peg, gross margin, debt-to-equity, current ratio, and interest coverage guide investment decisions.

Explore the time value of money, examining future value, present value, NPV, and IRR to see how inflation affects money. Apply these concepts to make calculated, everyday financial decisions.

Compare the time value of money by showing that $100 today grows to $105 in one year at 5% interest, illustrating compounding and future value concepts.

Explore the future value of money through compound interest, showing how $100 grows to $162.8 at 5% over ten years, and introduce the future value formula and discount concepts.

Compute the present value of future money by discounting future cash at a rate. For example, $100 in 10 years is $61.33 at 5%, illustrating inflation and interest rate effects.

Calculate a company's wacc by weighting debt at 5% and equity at 15% with 80/20, yielding 7%, then apply this discount rate to the three-year net present value of $1000.

Compute Jack’s future wealth by applying annual compounding to $10,000 yearly deposits over ten years at a 10% imaginary rate, illustrating total growth to about $159.374 thousand.

Evaluate two investment options, A and B, using net present value and IRR at a 10% discount rate; the example concludes option A is the better choice.

Explore the time value of money, comparing present value, future value, compounding and discounting, using net present value and IRR to evaluate investments.

Learn how revenue and cost drive budgeting by calculating revenue from price and quantity, and classify costs into fixed, variable, and capex, including networks for telco operators.

Classify costs as fixed, variable, or mixed using a Netflix-like subscription model, covering content, sales, marketing, technology, general and administrative, and streaming costs.

Interpret Netflix's cost structure by analyzing revenue, cost of revenue, and operating costs to reveal gross and net profit, and discuss optimization through content, marketing, and technology costs.

Defines budget planning by assessing revenue opportunities and costs; uses a top-down market-to-company approach, incorporates past data and seasonality, reviews fixed costs, and aligns revenue with goals to optimize profitability.

Build a five-year budget for company A, based on historic data, in Excel, forecasting pack prices, costs, market share, and revenue to project gross margin and net profit.

Analyze Company A's five-year budgeting outcomes and recommend upselling higher price packs to boost profits and market share. Optimize content and operational costs through vendor negotiations, automation, and scalable technology.

Define goals, prioritize growth, and align targets with expected growth to boost average revenue per user, then budget using top-level metrics, market share, and historical data.

Explore valuation methods, focusing on discounted cash flow, to understand how to value a business or asset and inform calculated daily-life decisions.

Understand valuation as the process of determining current worth of an asset or a company, using metrics like PE ratio, price-to-book, and PEG, to guide investments, mergers, and capital decisions.

Explore valuation methods, including discounted cash flow, comparable company analysis, asset-based valuation, and market capitalization, to estimate intrinsic value from future cash flows and assets.

Use discounted cash flow to value a company by projecting future free cash flows, applying wacc, discounting to present value, and estimating intrinsic value per share via terminal value.

Apply discounted cash flow to value Apple in a retrospective 2023 analysis, revealing a fair value between 163 and 243 per share under 3% and 5% terminal growth scenarios.

Apply discounted cash flow to estimate intrinsic value by projecting five-year cash flows, net debt, and terminal value. Compare to market capitalization and supplement with comparable, asset-based valuations.

Develop a financial case using a framework that weighs upsides and downsides, starts with market size and market share, accounts for costs, assumptions from past trends and data, and sensitivity.

Analyze market entry cases to assess viability, costs, payback period, and opportunities when expanding from Asia to Europe, using financial evaluation and past trend data to guide investment risk mitigation.

Assesses a market entry case for a European EV manufacturer entering Thailand, building a five-year financial model with zero discount rate and bull and bear scenarios.

Explore market-entry planning through a finance-led business case, using data-driven assumptions, price and cost structure, and five-year payback analysis for Thailand's EV market.

Explore strategies to increase profitability by cutting costs, optimizing operations, leveraging new revenue streams, and adjusting prices to earn more with lower costs.

Explore a real-world retail case study on boosting profitability by adjusting pricing, expanding online sales, and optimizing inventory to lift margins.

Assess the current revenue structure and cost drivers, identify improvement opportunities, and prioritize actions to shift more revenue online, optimize inventory, and lift net profit from 6% to 16%.

Learn how M&A cases evaluate feasibility, value, and synergy opportunities when companies combine or acquire, weighing risks and integration challenges to maximize shareholder value.

Analyze an M&A case study by building a discounted cash flow model to evaluate a buyer's acquisition of a target, incorporating debt, synergies, and growth scenarios.

Analyze an m&a case study to identify synergies, 1.5 million in cost savings, valuation approaches, financing structure including debt and cash, and integration risks and cultural fit.

Apply the methodologies and tools from this finance fundamentals course to make calculated decisions in daily life or business life.