Spring 2012

Course Description

Principles underlying the financial management of a business: time value of money, securities valuation, capital budgeting, cost of capital, sources of funds, capital structure policy, cash management and dividend policy.

Pre-requisite: Financial Accounting

Course Learning Objectives

Upon completion of the course, students should be able to:

1)      Apply fundamental financial techniques to solve common business problems

2)      Evaluate financial opportunities using relevant theory and practice

3)      Critique strategic issues from a financial perspective

 

Course Learning Activities

Textbook Readings:   

Chapter readings are assigned according to the schedule which follows.  Textbook reading is required and is designed both to reinforce what is discussed in class, and cover topics for which classroom time is insufficient.

End-of-Chapter Problems

For each textbook chapter reading, problems will be assigned.  These problems will not be collected or graded, but selected problems will be discussed in class.  These problems are the best preparation for the exams.

Assessment Tools

Exams= 90% of the final course grade

There will be three equally weighted exams, each worth 30% of the final course grade.  Grades are awarded based on each student’s correct answers and the ability to clearly explain the calculation process.

Class Participation = 10% of the final course grade

This part of the student’s grade is based on the contribution to class discussions by way of asking and answering questions, and assisting in bringing about a productive learning environment.  Attendance is also included in this part of the course grade.

Attendance Policy

Attendance is included in the Class Participation element of the course grade.  However, students missing

more than seven classes, whether excused or unexcused, will fail the course.

Course Textbook

Besley, Scott and Eugene F. Brigham. 2008. Essentials of Managerial Finance, 14th ed. Mason, OH: Thomson South-Western

 

Course Schedule

1) An Overview of Managerial Finance

Finance manager’s responsibilities, business ethics, agency relationships

• Readings: Chapter 1 HW: none

2) Analysis of Financial Statements

Income statement, balance sheet, cash flow statement

• Readings: Ch. 2 HW: None

3) Analysis of Financial Statements

Ratio analysis

• Readings: Ch. 2 HW: 2,3,4,14

4) The Financial Markets and the Investment Banking Process

Financial markets and institutions

• Readings: Ch. 3 HW: 1,2

5) The Time Value of Money

Future value, present value

• Readings: Ch. 4 HW: 4,5,9,11,12,13,19,20,23

6) The Time Value of Money

Annuities, uneven cash flow streams

• Readings: Ch. 4 HW: continued

7) Special Topics

8) The Cost of Money

Interest rates

• Readings: Ch. 5 HW: 15(a,b,c),3,4,5

9) Bonds (Debt)

Characteristics and Valuation

• Readings: Ch. 6 HW: 6,9,15

10) Review

• Readings: Ch. 1-6

11) ***Exam #1***

• Readings: Ch. 1-6

12) W 10/12 Stock (Equity)

Characteristics

• Readings: Ch. 7 HW: 8,15,17,21

MIDTERM BREAK

No University classes held

13) Stock (Equity)

Valuation

• Readings: Ch. 7 HW: continued

14) Special Topics

15) Risk and Rates of Return

Defining and Measuring Risk, Capital Asset Pricing Model

• Readings: Ch. 8 HW: 9,11,15,16,17,18,19,22

16) Capital Budgeting Techniques

Payback, net present value, internal rate of return

·         Readings: Ch. 9 HW: 12,13,15,16

17) The Cost of Capital

Weighted average cost of capital

·         Readings: Ch. 11 HW: 8,17,18,19,21,22,23,24,27

18) Capital Structure

Business and financial risk, optimal capital structure, degree of leverage

·         Readings: Ch. 12 HW: 10,13

19) Review

• Readings: Ch. 7-9, 11-12

20) ***Exam #2***

• Readings: Ch. 7-9, 11-12

21) Make Up Class

22) Dividend Policy

Signaling, stock splits, free cash flow

• Readings: Ch. 13 HW: 1,2,6,8,11

23) Working Capital Policy

Cash conversion cycle, short-term financing

• Readings: Ch. 14 HW: 7,8,10,11,12

24) Managing Short-Term Assets

Credit policy, managing receivables, inventory level and control

• Readings: Ch. 15 HW: 11(a,b,c),13

25) Managing Short-Term Liabilities

Accounts payable, short-term bank loans

• Readings: Ch. 16 HW: 3(a,b,c),5,7,8,10(a,b),12

26) Financial Planning and Control

Breakeven analysis, additional funds needed

• Readings: Ch. 17 HW: 4(a,b),6,8(a,b,c),12(a,b)

27) Review

• Readings: Ch. 13-17

28) ***Exam #3***

To take place during Final Examination Week.

• Readings: Ch. 13-17