EN.662.611 Strategies: Accounting & Finance
EN.662.611 Overview
- Fall 2026
- Whiting School of Engineering
- Graduate engineering management course
- Letter grade only
- Three exams, ten problem sets
A course built around accounting as a language
The Fall 2026 syllabus describes a course for anyone who could be called on to analyze or communicate financial results or to make financial decisions.
- Assessed by Three exams, ten individual problem sets and graded participation on weekly articles.
- Hardest step Getting the direction of each entry, ratio or variance right before doing any arithmetic.
- How to prepare Rebuild every formula from the statement it comes from, then test it on a company you know.
How EN.662.611 is assessed
| Component | Weight | Format |
|---|---|---|
| Articles, Attendance & Participation | 10% | Weekly articles on Canvas; students are called on at random to discuss them |
| Problem Sets | 25% | Individual work with no collaboration, due at the start of class |
| Financial Accounting Exam | 25% | Week 7, October 13, 2026 |
| Financial Statement Analysis Exam | 15% | Week 9, October 27, 2026, in the second half of class |
| Managerial Accounting Exam | 25% | Week 14, December 8, 2026 |
The five components in the Fall 2026 syllabus total 100%. The course is letter graded only, on a scale of A for 90 to 100, B for 80 to 89, C for 70 to 79, D for 60 to 69 and F below 60, with pluses and minuses at the instructor's discretion; the pass/fail option is not available. Late problem sets lose at least ten percent of the grade and earn no credit once the answers have been reviewed in class. Grade discrepancies must be raised with the teaching assistants before December 11, 2026. Check Canvas for any change.
Current EN.662.611 dates
| Date | Item | Control |
|---|---|---|
| October 13, 2026 | Financial Accounting Exam | Week 7; the syllabus notes no regular class that day. |
| October 27, 2026 | Financial Statement Analysis Exam | Week 9, second half of class. |
| December 8, 2026 | Managerial Accounting Exam | Week 14; the syllabus notes no regular class that day. |
| December 11, 2026 | Grade discrepancies | Last day to raise a posted grade with the teaching assistants. |
Dates are as published in the class topics and assignments schedule of the Fall 2026 syllabus. Confirm exact deadlines and submission settings in the live LMS.
What EN.662.611 covers
Twelve chapters follow the Fall 2026 schedule: the accounting cycle and the balance sheet accounts first, then financial statement analysis, then costing, pricing, capital budgeting and variance analysis.
Financial Statements and the Language of Business
GAAP and the SEC filings, the accounting equation, the four statements and how net income links themWhy the course calls accounting a language
The first Week 1 lecture starts from the market.
- Expectations, past performance and market prices
- GAAP, the FASB and management's choices
- The 10-K, 10-Q and 8-K
- The accounting equation and balance sheet order
- Accrual basis and the matching principle
- Retained earnings and the business life cycle
The Accounting Cycle and Adjusting Entries
Transaction analysis, journal entries, T-accounts, the trial balance, deferrals and accruals, and statement formatsAnalysis comes before any entry
Transaction analysis takes an economic event, looks through to its substance and translates it into accounts and amounts.
- Transaction analysis and the rules of debit and credit
- General journal, T-accounts and the general ledger
- The trial balance and what it cannot prove
- Deferred and accrued revenue
- Prepaid and accrued expenses, interest and depreciation
- Multi-step income statement and balance sheet format
Net Sales, Receivables and Inventory
Contra-revenue discounts, bad debt estimation, FIFO, LIFO and average cost, lower of cost or market, and turnover ratiosRevenue the company expects to keep
Week 3 starts with monetary assets, whose value is fixed in dollars, and with cash and cash equivalents: currency, checks and investments maturing within three months that are readily convertible and unlikely to change in value.
- Cash equivalents and separation of duties
- Revenue recognition criteria
- Credit card and sales discounts
- Allowance for doubtful accounts
- Percentage of credit sales and aging methods
- FIFO, LIFO, average cost and LIFO conformity
Capital Assets, Depreciation and Intangibles
Capitalized cost, straight-line, declining balance and MACRS depreciation, disposals, amortization and goodwill impairmentThree kinds of long-lived asset
Week 4 separates capital assets into property, plant and equipment, which is depreciated; intangibles, which are amortized when their life is definite and tested for impairment when it is not; and natural resources, whose depletion flows into cost of goods sold.
- Categories of capital assets
- Capitalized cost and the place-in-service date
- Straight-line, declining balance and MACRS
- Book versus tax depreciation
- Disposal, gains and losses
- Fixed asset turnover
Short-Term Liabilities and the Cash Conversion Cycle
Working capital, payables, current and quick ratios, contingent and payroll liabilities, and days in the cash cycleMatching financing to what it pays for
The second Week 4 lecture begins with the financing mix. Short-term assets such as inventory should be financed with short-term liabilities such as accounts payable, and long-term assets with long-term debt.
- Matching short-term and long-term financing
- Working capital in dollars
- Days in inventory, DSO and the average payment period
- The cash conversion cycle and its levers
- Current and quick ratios
- Contingent liabilities
Corporate Bonds and Leverage Ratios
Coupon versus market rate, bonds sold at par, premium or discount, effective interest amortization and debt service ratiosWhy companies borrow
Week 5 compares debt with equity. Debt does not dilute owners' voting power, costs less because interest is tax deductible while dividends are not, ranks first in liquidation and provides more leverage.
- Debt versus equity financing
- Bond terminology and features
- Call and conversion features
- Coupon rate versus market rate
- Premium, par and discount
- Effective interest amortization
Shareholders' Equity and Dividends
Legal forms, contributed and earned capital, par value, splits, preferred and treasury stock, and dividend datesWhy most large businesses are corporations
The Week 6 equity lecture compares legal forms. Sole proprietorships and partnerships are easy to form and lightly regulated, but their owners face unlimited liability.
- Sole proprietorship, partnership and corporation
- Contributed versus earned capital
- Par value and additional paid-in capital
- Stock splits
- Treasury stock and share counts
- Preferred and cumulative preferred stock
DuPont Analysis and Financial Statement Analysis
Return on equity decomposed into profitability, efficiency and leverage, and the headline behind a year-on-year changeThe purpose of the DuPont system
DuPont analysis organizes the drivers of return on equity. In the course it supplies the headline of a financial statement analysis and shows where to look for the story behind it.
- Return on equity and its three levers
- Net profit margin and cost control
- Total asset turnover and asset management
- Financial leverage, risk and return on assets
- The return on equity pyramid
- Writing a DuPont headline
Cost Behavior and Product Costing
Managerial versus financial accounting, cost classifications, the predetermined overhead rate and per-unit product costManagerial accounting looks forward
Week 9 contrasts two branches of accounting. Financial accounting is external, reports past performance for the whole organization, follows GAAP and is mandatory.
- Managerial versus financial accounting
- Direct and indirect costs
- Variable and fixed costs and the total cost line
- Product and period costs
- Relevant, sunk and opportunity costs
- The predetermined overhead rate
Breakeven and Cost-Volume-Profit Analysis
Contribution margin, breakeven in units and dollars, target profit, the contribution format and price-volume tradeoffsCost behavior sets the stage
Week 10's second lecture builds on cost behavior. Fixed costs are constant within a relevant range, the band of activity over which the cost structure holds; beyond it, fixed costs step up.
- Fixed and variable cost behavior
- The relevant range
- Contribution margin per unit and ratio
- Breakeven in units and in dollars
- Target profit
- Traditional versus contribution format
Capital Budgeting Decisions
Relevant cash flows, payback, net present value, internal rate of return, the profitability index and the post auditWhy capital budgeting exists
Capital budgeting decides which long-lived investments a company should fund, and it matters because capital is limited.
- Types of capital budgeting decision
- Relevant cash outflows and inflows
- Working capital and depreciation tax shields
- Payback period
- Net present value and the cost of capital
- Internal rate of return
Master Budgets, Standard Costs and Variances
The cash budget, ideal and practical standards, flexible budgets, and quantity and price variances with responsibilityThe master budget as a plan
The course's master budget exercise shows what a plan must assume: a price and cost per unit, an inventory policy tied to the next month's sales, a payment lag on purchases, a collection pattern for credit sales, a minimum cash balance and borrowing in fixed multiples at a stated interest rate.
- The schedules of a master budget
- Collections, payments and the cash budget
- Engineered standard costs
- Ideal and practical standards
- Master versus flexible budget
- Volume, revenue and spending variances
It treats accounting as a language: the vocabulary and processes that capture every financial transaction, followed by the habit of thinking creatively when a firm's past performance is analyzed or its future results are forecast.
The course belongs to the Master of Science in Engineering Management at the Whiting School of Engineering, and the syllabus describes it as exposing leaders to tools that help them use an organization's resources better; it moves quickly from vocabulary to judgment.
How the semester is organized
The schedule falls into three blocks.
Weeks 1 to 6 build financial accounting: financial statements and the accounting cycle, adjusting entries, net sales and monetary assets, inventory, capital assets, short-term liabilities and the cash conversion cycle, corporate bonds, shareholders' equity and the DuPont system. The Financial Accounting Exam follows in Week 7. Week 8 turns to financial statement analysis, examined in the second half of the Week 9 class.
The remaining weeks move to managerial accounting and finance: cost classifications, product costing, breakeven analysis, capital budgeting, the master budget, standard costs, and flexible budgets with variance analysis, closed by the Managerial Accounting Exam in Week 14.
What you are expected to read
The required text is the eleventh edition of Financial Accounting by Libby, Libby and Hodge, read in assigned page ranges each week.
McCormick and Company's 2025 Annual Report is also required, and it serves as the company you practice on.
The managerial weeks draw on electronic reserve readings from Brewer, Garrison and Noreen's Introduction to Managerial Accounting and from Gitman's Principles of Managerial Finance, the latter for capital budgeting.
Problem sets, Excel and deadlines
Problem sets are distributed through the semester and are individual work: the syllabus permits no collaboration and directs questions to the professor or the teaching assistants.
Solutions are due at the beginning of class on the listed date. Late submissions lose at least ten percent of the grade, and nothing is credited once the answers have been reviewed in class.
Several problem sets are submitted as Excel workbooks, which fits a stated objective of the course: building financial worksheets and valuation models in Excel.
Articles, attendance and participation
Articles linking current events to the week's lecture are posted on Canvas, and you are responsible for reading them before class.
Students are selected at random to answer the instructor's questions about them and are graded on critical thinking and on answering clearly and concisely.
A self-assessment rubric asks you to rate yourself on attendance, listening, preparation, the frequency of your voluntary participation and the quality of your comments, which it weights evenly.
The course's rules on generative AI
The syllabus says generative AI must not be used to write required essays or to solve problems, and treats that as use of unauthorized software under the university ethics policy.
You may use it to brainstorm or to ask how a problem might be approached, but the final work must be your own, you should state how you used it, and you are told to verify anything it gives you against the course materials.
How to use this guide
Each chapter follows one or two weeks of the schedule.
Read the overview, then work the chapter's example by hand before checking it, because every exam item in this course rewards a correct setup more than a remembered answer. Direction words decide most lost points here: debit or credit, favorable or unfavorable, increase or decrease.
After each chapter, write the ratio or rule it adds to the one-page map the course itself uses, the return on equity pyramid, and note which statement each input comes from.
Worked example · free
Find the breakeven point and the volume for a profit target
- 2Contribution margin per unit is $30 minus $18, or $12; the ratio is $12 divided by $30, or 40%.
- 2Breakeven units are $96,000 divided by $12, or 8,000; breakeven dollars are $96,000 divided by 0.40, or $240,000.
- 2Treat the target as an extra fixed cost: ($96,000 plus $24,000) divided by $12 gives 10,000 units.
Key terms
- Accounting Equation
- The identity that assets equal liabilities plus shareholders' equity, which every transaction must leave in balance.
- Accrual Basis
- The rule that revenue is recognized when goods are delivered or services performed and expenses when their benefit is used, whenever cash moves.
- Adjusting Journal Entry
- A period-end entry that corrects one balance sheet account and one income statement account for a timing difference.
- Net Realizable Value
- The amount of receivables a company expects to collect: gross billings less the allowance for doubtful accounts.
- Cash Conversion Cycle
- The number of days a company is out of pocket cash: days in inventory plus days sales outstanding minus the average payment period.
- Effective Interest Method
- An amortization method that sets each period's bond interest expense at the carrying value times the market rate.
- Return on Equity
- Net income divided by average total equity, decomposed in the DuPont system into profitability, efficiency and leverage.
- Predetermined Overhead Rate
- Estimated total manufacturing overhead divided by the estimated quantity of the allocation base, set during the annual budget.
- Contribution Margin
- Sales minus total variable costs: the amount left to cover fixed costs and then to produce operating income.
- Net Present Value
- The present value of a project's future cash inflows at the cost of capital, less the investment it requires today.
EN.662.611 FAQ
How is the grade split in this accounting and finance course?
The Fall 2026 syllabus weights the Financial Accounting Exam and the Managerial Accounting Exam at 25% each, problem sets at 25%, the Financial Statement Analysis Exam at 15%, and articles, attendance and participation at 10%.
When are the three exams held in Fall 2026?
The schedule places the Financial Accounting Exam on October 13 in Week 7, the Financial Statement Analysis Exam in the second half of class on October 27, and the Managerial Accounting Exam on December 8 in Week 14.
What rules apply to problem sets?
Each set is individual work with no collaboration permitted. Solutions are due at the beginning of class; a late set loses at least ten percent, and a set handed in after the answers are reviewed in class earns nothing.
Can generative AI help with problem sets?
Only for brainstorming or asking how to approach a problem. The syllabus forbids using it to solve problems or write required work, asks you to disclose how you used it, and warns that it can produce confident wrong answers.
Why does the course spend so long on debits and credits?
Every later topic, from bad debts to bond amortization and dividends, arrives as an entry. If you can say which account rises, which falls and which statement moves, the ratios and analysis later in the semester follow from the same logic.
What does the cash conversion cycle measure?
It counts the days between paying for inventory and collecting from customers: days in inventory plus days sales outstanding minus the average payment period. A shorter cycle frees cash, so the course reads it as a test of working capital management.
How does breakeven analysis help with pricing decisions?
It shows how a price change moves contribution margin and volume at the same time. A higher price raises margin per unit, but if demand is elastic the lost units can cut total contribution, so both effects must be computed before deciding.
Questions students ask in each EN.662.611 chapter
- Why does the income statement differ from the cash flow statement?
- The income statement follows the accrual basis, so revenue counts when earned and expenses when used, whatever the timing of cash. The cash flow statement reverses those timing differences to show actual cash moving in and out. Chapter 01 · Financial Statements and the Language of Business
- Does a balanced trial balance mean the books are correct?
- No. It proves only that debits equal credits. An entry posted to the wrong account, or a transaction left out entirely, still balances while misstating both the accounts and the statements built from them. Chapter 02 · The Accounting Cycle and Adjusting Entries
- Why are card sales treated as cash sales?
- The bank converts bundled card receipts to cash almost immediately, so the seller holds no receivable from the customer. The processing fee is recorded as a credit card discount that reduces net sales. Chapter 03 · Net Sales, Receivables and Inventory
- Is a repair after installation capitalized?
- Usually not. Once the asset is in service, routine repairs and maintenance are expensed as incurred. Only costs needed to acquire the asset and get it working are added to its capitalized cost. Chapter 04 · Capital Assets, Depreciation and Intangibles
- Why is the payment period subtracted in the cycle?
- While a supplier waits to be paid, it is effectively financing the company's inventory. Those days reduce the time the company must fund itself, so they shorten the cycle rather than lengthen it. Chapter 05 · Short-Term Liabilities and the Cash Conversion Cycle
- Why would investors pay more than face value for a bond?
- Because its coupon pays more than the market currently requires for that risk. Competitive bidding pushes the price up until the buyer's effective return falls to the market rate. Chapter 06 · Corporate Bonds and Leverage Ratios
- Why does a buyback not count as an expense?
- Buying back shares is a transaction with owners, not a cost of running the business. It reduces equity through the treasury stock account and never passes through the income statement. Chapter 07 · Shareholders' Equity and Dividends
- Why is leverage called risk rather than performance?
- Leverage raises return on equity by financing more assets with debt, not by earning more on those assets. The same debt that lifts returns in a good year deepens losses in a bad one. Chapter 08 · DuPont Analysis and Financial Statement Analysis
- Why is overhead applied with an estimated rate instead of actual costs?
- Actual overhead is known only at year end and swings with the seasons. A rate set in the annual budget lets each job be costed as it is finished and keeps unit costs stable across the year. Chapter 09 · Cost Behavior and Product Costing
- Why does operating income change faster than sales?
- Fixed costs do not move with volume, so every extra sale adds its whole contribution margin to income. A given percentage rise in sales therefore produces a larger percentage rise in operating income. Chapter 10 · Breakeven and Cost-Volume-Profit Analysis
- Why does payback ignore profitability?
- It stops counting once the investment is recovered, so cash after that point never enters the measure, and it treats a dollar in year three as equal to a dollar today. It is a liquidity test, not a profitability test. Chapter 11 · Capital Budgeting Decisions
- Why is a master budget poor for judging performance?
- It is set at a planned volume. If the company sells more, costs rise simply because more was made, so comparing actual cost with the master budget blames managers for volume they may have been right to deliver. Chapter 12 · Master Budgets, Standard Costs and Variances
How to study for the exam
Work each week in three passes: rebuild the formula or entry from the statement it comes from, solve one small case with your own numbers, then check every direction word against the numbers you produced. Before each exam, fill in the return on equity pyramid from memory and say where every ratio's inputs sit.
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