Foundations of finance

Aims of the course

This course aims to

1. Raise your financial awareness, confidence and skills; 
2. Enable you to engage more successfully with finance specialists; 
3. Support you if you are considering a career, secondment or further studies in finance.

Content

Foundations of finance is a straightforward introduction to financial understanding. No prior knowledge is required or assumed. The course will be particularly beneficial if you are studying finance or accounting – or considering doing so – and want an introduction or refresher on fundamental concepts.

It will also benefit you if you are self-employed, considering self-employment, considering a career or internship in finance, need to liaise with financial colleagues or advisors, or just interested in finance and want to learn more. The course will cover: money and capital; cash flows and cash flow forecasting; financial reporting; interest and return; and risk and risk management. 

All organisations and individuals need money - and usually capital funding - to continue their business operations or other activities. Funding providers may be willing to invest, or lend, the necessary capital. But funding providers need assurance about the security of their investments, expected rates of return, and the organisation’s risk management.

Cash management and flow forecasting are fundamentally important risk management tasks in any organisation. Even if we’re not directly responsible for these activities, we need to engage and communicate with our colleagues who are. Financial reporting is the outward facing summary, in conventional formats, of our organisation’s effective and sustainable financial management.

Presentation of the course

Each session will include an introductory lecture, your questions, discussion and examples incorporating financial numbers. Please bring something to write with and on, and a calculator.

Class sessions

1. Money and capital Money is a short term store of value, in the form of a promise to pay the bearer on demand. While money used to be backed by silver or gold, modern money has no inherent value. Its value derives instead from the trust and the confidence that its users have toward issuer of the promise to pay – usually a central government. Financial capital is a longer term store of value, usually in the form of a promise to pay later. Financial capital may be backed by other assets, but not always. Whether or not the financial 
capital is backed by other assets, trust toward its issuer is a fundamentally important component of its value. High levels of well-founded confidence are essential in a modern economy.
2. Cash flows and cash flow forecasting Cash is an enormously important asset for most organisations and individuals, most of the time. The less cash we have, the more important it becomes. If we run out of short term cash to pay our liabilities we can go bust, even if we still have value tied up in our longer term assets. Cash flows are the changes in our reserves of cash. Cash flow forecasting is making projections of our cash flows and cash reserves, and taking timely action to cover potential shortfalls. Related cash flow statements are a key building block of financial reporting.
3. Financial reporting External financial reports are accounts – also known as financial statements – prepared by the managers of organisations to answer the legitimate questions of different stakeholders in the organisation’s activities. Stakeholders in companies include its owners (shareholders) who want to know, “What have you managers been doing with our money and our other assets?” Other stakeholders include tax authorities, who want to know, “How much tax should the company be paying?” External financial statements are produced in standard formats, including cash flow statements, balance sheets, income statements and other information. Internal financial reports will – ideally – include all the other information the managers need to run the business 
from day to day, as well as strategically.
4. Interest and return Investors in financial capital include depositors in banks, lenders, and shareholders. In all cases the investor wants their original invested capital to be safe. They also expect a surplus on top of the amount they originally invested. This surplus is known as a return, often expressed as an annual percentage rate of return, to enable comparisons between different capital assets. Interest is one form of return, generally calculated as a percentage of the amount originally deposited, loaned or borrowed – or sometimes on an accumulating balance rolling up over time, or on a reducing balance being paid off over time. Interest is a form of income. Total returns may include capital gains as well as income. Returns can be negative, as well as positive.
5. Risk and risk management For investors in organisations, key risks they are concerned about include: losses in the capital value of their invested money, and reductions in the returns that they expected when they made their investments. Managers have fiduciary and stewardship responsibilities for the owners’ assets that they are managing on their behalf. This includes responsibilities for identifying, responding to, and reporting on the significant risks to which the organisation is exposed. Managers also have responsibilities to wider – and longer term – stakeholder interests.

Learning outcomes

The learning outcomes for this course are to enable you to: 

1. Improve your personal financial situation by applying selected insights from the course. 
2. Enjoy greatly improved interactions with financial specialists in your work. 
3. Determine whether further studies, a secondment or career in finance is appropriate for you.

Typical week: Monday to Friday

Courses run from Monday to Friday. For each week of study, you select a morning (Am) course and an afternoon (Pm) course. The maximum class size is 25 students. 

Courses are complemented by a series of daily plenary lectures, exploring new ideas in a wide range of disciplines. To add to the learning experience, we are also planning additional evening talks and events.

Evaluation and Academic Credit 

If you are seeking to enhance your own study experience, or earn academic credit from your Cambridge Summer Programme studies at your home institution, you can submit written work for assessment for one or more of your courses. 

Essay questions are set and assessed against the University of Cambridge standard by your Course Director, a list of essay questions can be found in the Course Materials. Essays are submitted two weeks after the end of each course, so those studying for multiple weeks need to plan their time accordingly. There is an evaluation fee of £75 per essay.

For more information about writing essays see Evaluation and Academic Credit.

Certificate of attendance

A certificate of attendance will be sent to you electronically after the programme.