25–35% of the AP exam. Key topics: Saving for Future Purchases (savings vehicles: HYSA, CDs; savings rate; opportunity cost of spending vs. saving), Borrowing, Credit, and Debt (types of credit: credit cards, personal loans, auto loans, mortgages; credit scores and credit reports; debt-to-income ratio; debt management strategies: avalanche vs. snowball), Compound interest calculations (simple vs. compound; frequency of compounding), Accounting and Financial Management (GAAP principles, role of accounting in business decisions), Business Expenses (startup costs vs. operating costs; fixed vs. variable costs), Financial Capital (sources of funding: equity vs. debt financing; lender and investor risk assessment), The Income Statement (revenue, COGS, gross profit, operating expenses, net income), The Balance Sheet and Net Worth (assets = liabilities + equity; current vs. long-term assets/liabilities), The Cash Flow Statement (operating, investing, and financing activities), Financial ratios (profit margin, current ratio, debt-to-equity), Ethics and Financial Reporting (GAAP compliance, consequences of fraudulent reporting), Business Canvas Project milestone: financial viability analysis, startup cost estimation, funding strategy.
Study guide content for this unit is being prepared. Check back soon for complete lesson notes, formula sheets, and worked examples.
