Overview
The purpose of the course is to enable students to understand the financial decision-making process and to interpret the impact of the financial decisions will have on value creation. The course therefore introduces the three major decision-making areas in financial management: the investment, financing, and asset management decisions.
On completion of this course students should be able to:
l Understand how financial management can add value to an organization;
l Apply tools of financial analysis and planning; make various decisions about investment, financing and asset management;
l Know special areas of financial management. This course is not only about making students adopt a certain set of theoretic knowledge, but also about how to apply what you have learned in practices.
Syllabus
l Chapter one
1. introduction to corporate finance
2. the corporate firm
3. the goal of financial management
4. the agency problem and control of the corporation
5. financial markets
l Chapter two
1. the balance sheet
2. the income statement
3. taxes
4. net working capital
5. financial cash flow
6. the accounting statement of cash flows
l Chapter three
1. financial statement analysis
2. ratio analysis
3. the Du Pont Identity
4. Using financial statement information
5. long-term financial planning
6. external financing and growth
7. some caveats regarding financial planning models
l Chapter four
1. valuation: the one-period cash
2. the multi-period cash
3. compounding periods
4. simplications
5. what is a firm worth
l Chapter five
1. bonds and bond valuation
2. more on bond features
3. bond ratings
4. some different types of bonds
5. bond markets
6. inflation and interest rates
7. determinants of bond yeilds
l Chapter six
1. the present value of common stock
2. estimates of parameters in the dividend-discount model
3. growth opportunities
4. the dividend growth model and the NPVGO Model
5. price-earnings ratio
6. some features of common and preferred stocks
7. the stock markets
l Chapter seven
1. why use net present value
2. the payback period method
3. the discounted payback period
4. the internal rate of return
5. problems with the IRR approach
6. the profitability index
7. the practice of capital budgeting
l Chapter eight
1. incremental cash flows
2. inflation and capital budgeting
3. alternative definitions of operating cash flow
4. investments of unequal lives: the equivalent annual cost method
l Chapter nine
3. individual securities
4. expected return, variance and covariance
5. the return and risk for portfolios
6. the efficient set
7. riskless borrowing and lending
8. announcements, surprises, and expected returns
9. risk: systematic and unsystematic
10. diversification and portfolio risk
11. market equilibrium
12. relationship between risk and expected return
l Chapter ten
1. the capital structure question and the pie theory
2. maximizing firm value versus maximizing stockholder interests
3. financial leverage and firm value
4. MM theory: proposition II (no taxes)
5. taxes
l Chapter eleven
1. costs of financial distress
2. can costs of debt be reduced
3. integration of tax effects and financial distress costs
l Chapter tweleve
1. different types of dividends
2. standard method of cash dividend payment
3. the benchmark case: an illustration of the irrelevance of dividend policy
4. repurchase of stock
5. personal taxes, issuance costs, and dividends
6. real world factors favoring a high-dividend policy