Economics is a fundamentals course about the market forces influencing spending habits, supply and demand, as well as boom times and recessions. Students must understand the basic drivers of the economy to understand how income can be effected by different stages of the business cycle. Individual savings, investing and spending habits can be timed in anticipation of booms, busts and dips in the stock market.
Businesses are required to manage their finances in accordance with laws and regulations. Publicly-traded companies must also comply with the Sarbanes-Oxley Act of 2002, which requires publicly-traded firms to publicly disclose accounting practices. Firms are expected to conduct routine financial audits internally and by independent auditors to catch errors and fraudulent activity.
Financial managers use financial analysis to examine expenditures, budgets, expected cash flow receipts, profit and loss statements. Modeling is used to project future expenditures, budgets, cash flow receipts and profit statements.
Courses in organizational psychology evaluate the behaviors exhibited in business settings that influence value-maximizing behaviors. For example, an organization may lose the ability to remain nimble as the organization increases in size. The advantage of remaining nimble is that the organization is able to respond to market fluctuations with agility. Psychological influences may be responsible for the loss in agility at a company. Financial managers must be able to recognize these psychological influences and work to combat them to improve cash flows, invest in new ventures and reduce wasteful spending.