The content of the basic course in finance is analyzed in terms of a number of dimensions. My presentation will focus on six areas: (1) our clients and their needs, (2) the managerial orientation, (3) coverage, (4) role of specialized techniques, (5) application to other purposive organizations, and (6) social responsibility issues.

J. Fred Weston, Comment: Regulatory Reform for the Deposit Financial Institutions--Retrospect and Prospects, The Journal of Financial and Quantitative Analysis, Vol. 9, No. 5, 1974 Proceedings (Nov., 1974), pp. 831-833

Forecasting financial requirements lies at the heart of accounting and financial decisions in the firm. All management decisions deal with the future and forecasting is inevitable. When decisions are made that involve the future, whether recognized or not, an implicit forecast is necessary. In recent years substantial literature on the practices of individual business firms in forecasting their financial requirements has become available primarily from the publications of the American Management Association. There are three main methods for projecting financing requirements. One is based on historical relationships and utilizes statistical methods. The second involves engineering analysis which is a combination of technical know-how and judgment. The third involves an operation analysis, not necessarily technical in nature and relies mainly on judgment and understanding of the kinds of operations the firm engages in. The traditional approach to forecasting financial requirements expresses the firm's needs in terms of the number of days' sales tied up in an individual balance sheet item.

Reviews the book "Problems in Finance," by Pearson Hunt and Charles M. Williams.

Sound principles of asset valuation provide a basis for approximations of current values. The major objection to the adoption of theoretically defensible principles of valuation and associated cost measurements is the opinion that difficulties of practical implementation are insuperable. This argument is considerably weakened by the fact that revaluations of assets take place in practice. Empirical studies demonstrate that the large magnitude of such adjustments results in important effects on net income. There is little evidence to indicate the nature of the considerations which guided such adjustments. It is suggested that if the fact of asset value increases were recognized in general accounting practice, the likelihood of the achievement of objective standards would be improved. Additional objections to the economic principle of asset valuation and associated cost measurement procedures are considered. The assertion that incorrect expense measurement has little significance for price policy is true only under a special set of narrow assumptions. The objection that identical physical assets are not, in practice, replaced is met by the provision that source of similar services will be replaced. If in replacement it is desired to produce a different type of services, this raises a problem not relevant to the valuation issue. Another suggested reason for disregarding value changes is that such value changes are self-canceling. This assumes a symmetry in cyclical fluctuations which is not demonstrable. It ignores changes in values resulting from changes in the economic structure or secular changes. The non-recognition of the economic principle of valuation in accounting regulations established by governmental agencies is also cited as a basis for its rejection. There is circularity involved here, however. In large measure, government tax regulations seek to reflect the best "recognized accounting principles."

Magnitude of the post-war price increases and the forecasts by competent economists of the likelihood of a continued secular price rise have had considerable influence on published views of the accountants. Accounting literature during the past eighteen months has increasingly reflected the viewpoint that accounting procedures should drop the assumption of a stable monetary unit and should recognize changes in the purchasing power of money. When the price level rises, what happens to the value of real assets and the purchasing power of money. The appropriate answer to this may be found by a consideration of the fundamental nature of money. One of the functions of money is to provide a numeraire, a common measure of values. The real value of a specific commodity is not defined by its absolute price, but by its price in relation to the prices of all other goods. If price levels change, reinforcing influences are set in motion. Money itself is used as a medium for investment and disinvestment. There exists a demand for and a supply of money itself. The value of money is determined by the same principles as the values of other economic goods. If changed price levels require modifications in inventory pricing procedures and depreciation cost measurement, gains and losses arising from changes in the value of money must also be recognized. H.W. Sweeney has emphasized, more than any other individual, the influence of changing price levels on the accuracy and relevance of accounting reports. The procedure set forth by Sweeney prescribes that the balance sheet items be stabilized first.