Course Description
Studies the concepts and tools of corporate financial management and financial planning, including capital budgeting, capital structure and net working capital. Considers the importance of ethics in financial decision-making.
Week 1
Lecture: Course Introduction
Lecture: Financial Environment
Outcomes
- Recognize the forms of business organization
- Identify the determinants of fundamental value
- Explain financial securities, markets and institutions
- Identify key features of bonds
- Interpret bond valuation
- Demonstrate how to measure yield
- Demonstrate knowledge in assessing risk
Week 2
Lecture: Valuation
Outcomes
- Discuss time value of money, future value, present value, rates of return, and amortization
- Identify features of common stock
- Determine the value of common stock
- Define the efficient market concept
- Explain the concept of preferred stock
Week 3
Lecture: Financial Statement Analysis
Outcomes
- Identify and explain the components of the income statement, balance sheet and statement of cash flows
- Identify accounting income versus cash flow
- Explain the differences between personal taxes and corporate taxes
- Perform ratio analysis
- List the components of the Du Pont system
- Define the meaning of changing ratios and the limitations of ratio analysis
Week 4
Lecture: Risk and Return
Lecture: Risk and Return - Solutions
Outcomes
- Explain the basic concepts of risk and return
- Distinguish between stand-alone risk and portfolio (market) risk
- Explain the CAPM model
- Discuss Portfolio Theory
- Identify and explain the Capital Market Line (CML) and the Security Market Line (SML)
- Calculate Beta
Week 5
Lecture: Cost of Capital
Outcomes
- Identify and explain the cost of capital components: debt, preferred and common stock
- Define and Calculate WACC
- Overview and preview of capital structure effects
- Identify business versus financial risk
- Identify the impact of debt on returns
- Discuss capital structure theory, evidence, and the implications for managers
Week 6
Lecture: Derivatives
Outcomes
- Become familiar with financial options terminology
- Explain and use the Black-Scholes Option Pricing Model
- Define the valuation of Put options
- Explain the concept of Put-Call Parity
- Discuss how option pricing is used in Corporate Finance
- Explain derivatives and how they are used to manage risk
Week 7
Lecture: Capital Budgeting
Outcomes
- Explain the importance of capital budgeting
- Compute payback period, NPV and IRR for a project
- Become familiar with the concept of unequal lives and economic life
- Demonstrate the ability to estimate cash flows
- Identify relevant cash flows
- Discuss how working capital is treated for capital budgeting purposes
- Interpret the different types of risk analysis: sensitivity analysis, scenario analysis, and simulation analysis
Week 8
Lecture: Mergers and Acquisitions
Outcomes
- Identify the types of mergers
- Perform merger analysis
- Identify and explain the role of investment bankers, LBOs, divestitures and holding companies
- Identify the factors which make multinational financial management different from domestic financial management
- Define and interpret foreign exchange rates
- Discuss the major international money and capital markets
The course description, objectives and learning outcomes are subject to change without notice based on enhancements made to the course. November 2011
